Live link to proof of concept here.
Whether corporations can benefit stakeholders' interests beyond shareholders' interests is an open question. Is there a positive role corporations can play in benefitting employees, suppliers, creditors, their communities and the environment beyond the amount those benefits already factor into maximizing shareholder value? Or are corporations legally and culturally locked into an inevitable cycle of financial shareholder value maximization?
Arguably, many shareholders today care about those other stakeholders. Some shareholders would give up financial gain, whether in share value or dividend payments, if the amount they gave up could be channeled to other stakeholders. However, many shareholders do not understand their rights and exercising those rights is difficult. Given this, shareholders rarely voice their interests to corporate leaders.
I developed this user interface to experiment with how shareholders could voice their desired tradeoffs between financial gain and stakeholder benefit. It asks shareholders how much capital value or dividend payment they would be willing to give up if that amount (or a multiple thereof) benefited various stakeholders. The interface currently includes the following stakeholders: environment, employees, suppliers, community, creditors. Other potential options could include society or the economy of the state or nation.
A corporation could annually solicit shareholders' views through a user interface like this prior to the annual general meeting. The respondent shareholders' financial tradeoffs could then be aggregated on a weighted basis upon shareholding (i.e. number and class of shares held). By understanding the appetite of the shareholders' trade-offs between financial gain and stakeholders, the board could act on this aggregate data. For example, a majority of shareholders might be willing to give up a small portion of their dividends if at least two times that amount flowed to benefit the environment. Armed with this data, directors may decide that it's worth scaling back the dividend payment in the next financial year to fund the capital cost of an incineration plant to avoid dumping chemicals into a river.
This user interface was developed in response to a Harvard Law School seminar on Stakeholder Capitalism. In the second seminar of the series, Sir Oliver Hart responded to critiques offered by students on his paper (with Luigi Zingales) The New Corporate Governance 1 U. Chi. Bus. L. Rev. 195 (2022). While I thought that binding shareholder resolutions on stakeholder matters would be infeasible, I thought there are significant opportunities to give shareholders more of a voice on their desired financial/stakeholder trade-offs.