No smoke without ire

Shareholder primacy is dead.

Long live shareholder value primacy.

The past few years have seen a very welcome growth in the number of corporates claiming to have a core purpose that is beyond simply lining the pockets of their shareholders or indeed, their senior executive teams. The latter’s remuneration is of course, massively dependent on the firm’s share price as part of so called “long-term incentive plans”. Mission statements and lofty goals abound. These claim that business is going to change the world through its core business and not as the fig leaf of CSR that attracted so much criticism in the past. We even heard from the US Business Roundtable back in April 2019 that they’d made the landmark decision to end shareholder primacy. Cynics raised a collective eyebrow.

I’ve never seen myself as an apologist for big business, but I did feel that we were starting to turn a corner — that a combination of societal expectation and changing employee aspirations might at last mean that the penny had finally dropped. Companies could genuinely claim that they were balancing profit with purpose.

The recent Philip Morris International (PMI) takeover of health company Ventura caused my heart to sink and made me question whether I’d been wrong all along. I’m sure many of you feel the same.

In case you missed it, here’s the story in a nutshell. Ventura is a health company that manufactures inhalers and similar devises that are focused on enhancing and prolonging life. Philip Morris, of Marlboro Man fame, makes ciggies which are proven to dramatically shorten life. The howls of protests from NGOs and health authorities point out the inherent conflict of interest and perverse incentives this takeover causes.

This appears to have fallen on deaf ears and Ventura’s shareholders decided to cash in on the huge premium PMI were willing to pay. Shame on them. Given the fact that the company is now likely to be shunned by the global health community and shut out of critical medical research contracts and sponsorship deals, the economic logic of the deal may become far less appealing.

PMI claim that they have a vision of a smoke free future and should be allowed to have an acquisition led transition towards this lofty goal. However, the fact that 75% of their revenues still come from selling cigarettes, often to youth in weak states — cynically called “growth markets”, then I don’t think they’re in too much of a hurry to make the shift.

The biggest disappointment I have is the apparent deafening silence from another critically important stakeholder — Ventura’s employees. Less than a year ago I wrote about the latent potential of employee activism — collective action by often a small group of employees to influence business strategy from the bottom up. Remember the Google strikes ? Or Microsoft employees managing to terminate a contract with the US government over its treatment of the kids of Mexican immigrants on the southern border.

So please speak up employees of Ventura!

PMI cannot make this acquisition work without your tacit support. How do you feel about the fact that having joined a healthcare company, you woke up one morning to discover your salary is now paid by a cigarette company? Individually you may feel powerless to act — collectively you are not. Far from it.

For the long term viability of the company and therefore your own self interest, it might be time to flex your muscles and make your voices heard.

This article is an extract from the October edition of The Bullog*, my monthly blog. To read the full blog or to sign up to receive The Bullog directly each month visit………




Gib Bulloch is an award-winning social intrapreneur who consults, writes and speaks on topics relating to the role of business in society.

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Gib Bulloch

Gib Bulloch

Gib Bulloch is an award-winning social intrapreneur who consults, writes and speaks on topics relating to the role of business in society.

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