Apple seems to be coming around to my way of thinking about shareholders. After all, what do shareholders do to help a company that already is a massive success? They drain the company of money and do nothing else of value.
Hear me out. Early shareholders help newborn companies grow and succeed with their investments in the company. Apple’s shareholders– along with Google, Facebook, Amazon, and many others– do not help the company whether buying or selling stock.
Fortunately, Apple has so much money on hand that it can afford to pay shareholders who could revolt and vote out various executives. I say Apple’s expenditures on stock buybacks and shareholder dividends are a waste of money.
I’m not alone. Two Davids tell of a trend developing among successful companies who would prefer shareholder step aside.
Nearly 200 chief executives, including the leaders of Apple, Pepsi and Walmart, tried on Monday to redefine the role of business in society — and how companies are perceived by an increasingly skeptical public.
That’s journalistic gibberish for what those big companies really want to do. Redefine the purpose of a corporation so that shareholders have less importance.
Companies should no longer advance only the interests of shareholders… must also invest in their employees, protect the environment and deal fairly and ethically with their suppliers.
That would be the first step in making sure shareholders don’t screw up a good company.
In the past, shareholder value was the most important thing. The stock price and where it was going. Revenue, growth, profits, company health and cash on hand were never as important as the stock price; translated as shareholder value.
Executives from those companies issued a shot across the bow of shareholders. Note the keyword.
While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders… We commit to deliver value to all of them, for the future success of our companies, our communities and our country.
What happened to shareholders?
They became stakeholders, and that includes management, customers, suppliers, and, somewhere down the line– definitely not on top– shareholders.
Apple derives no value from shareholders. They buy stock on the market, not from Apple, and the money they invest is in the stock and its price, not money that goes to Apple. If the stock price goes up, investors in the stock make more money.
When Apple buys stock on the market and retires those shares, that tends to help the stock price and, indirectly, investors. When Apple gives shareholders dividends that helps shareholders, not Apple Inc.
Apple has a shareholder problem because they drain the company’s cash reserves without adding value. That Business Roundtable is the first step for successful companies to divorce themselves from shareholders who provide no value to the company.