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End of Shareholder Primacy, Part III: CEO Daily

Good morning.

My former colleagues at the Wall Street Journal editorial page launched a broadside against the Business Roundtable’s “stakeholder” policy yesterday. (See my story here, and the Journal’s riposte here.) Their argument, in a nutshell:

—A fuzzy commitment to multiple stakeholders could undermine financial discipline; and

—The move won’t appease left-wing politicians like Elizabeth Warren.

On the second point, I fully agree. I suspect most BRT CEOs would agree as well. They didn’t get their positions of power by being hopelessly naive.

On the first, it usually comes down to time horizons. There is an endless playbook of deleterious things companies can do to boost their profits in the short run: gut training programs, eliminate R&D, ignore product risk, scrimp on environmental protections, etc. But if you screw your employees, your customers and the communities in which they operate, you eventually screw yourself. In the long run, shareholder interests and stakeholder interests converge.

Worth noting the four CEOs who talked to me for this story—Jamie Dimon, Ginni Rometty, Mary Barra, and Alex Gorsky—each work for a company that’s been around for more than a century. None of those companies is without blemish. But they must be doing something right to outlast the competition.

More news below. And be sure to read Phil Wahba’s story about one CEO who is delivering financial results in spades: Target’s Brian Cornell. Under his leadership, Target has demonstrated how digital and brick and mortar go hand-in-hand, delivering comp sales results that have beaten Macy’s, Kohl’s and even Walmart over the last two years.

Alan Murray


Alibaba IPO

Alibaba’s up-to-$15 billion Hong Kong listing is on ice, thanks to the financial hub’s perilous political situation. Reuters reports that the IPO, which was supposed to take place in the next week or so, could still take place as early as October, depending on how the unrest pans out. Reuters

Disney Accounting

A former Disney senior financial analyst has accused the company of inflating revenue for years, with the aid of flawed software. Disney denies Sandra Kuba’s claims and says she was fired for caused in 2017—she says she was fired after she contacted the SEC. Fortune

Philips Brazil

Meanwhile, Philips reportedly sacked a manager in a Brazilian subsidiary nine years ago for warning his superiors—via a company hotline—about suspicious sales of medical equipment to the country’s government. The alleged bribery racket was finally exposed last year, and the Dutch conglomerate says it is cooperating with an investigation into Brazil’s medical device industry. Reuters

Greenland Rebuff

In case you were still wondering how serious President Trump was about buying Greenland, he’s now cancelled a trip to Denmark because the prime minister refused to discuss selling the territory, describing the notion as “absurd.” Trump tweeted: “Denmark is a very special country with incredible people, but based on Prime Minister Mette Frederiksen’s comments, that she would have no interest in discussing the purchase of Greenland, I will be postponing our meeting scheduled in two weeks for another time.” Fortune


Italian Chaos

Italy is in political chaos—which is admittedly not unusual—following the resignation of Prime Minister Giuseppe Conte. As he departed, the notoriously mild-mannered Conte lashed out at his far-right deputy, Matteo Salvini, for abandoning his coalition with the populist 5Stars Movement. Now Salvini, of the League party, will try to become prime minister, either through a snap election or by finding new coalition partners. Politico

Meng Case

Huawei CFO Meng Wanzhou wants her extradition from Canada to the U.S. scrapped on the basis of alleged procedural misconduct by Canadian and U.S. officials. Meng says that, when she was pulled aside at the Vancouver airport for secondary screening, it was a “ruse.” Her lawyers also say the U.S. tried to use extradition proceedings for economic and political gain. Wall Street Journal

Chinese Investment

Over the course of one month, investors pulled $2.9 billion from China-investing funds. That’s the sharpest pullback of this sort since the start of 2017, and it accounts for around half of this year’s outflow from mutual funds and ETFs that invest in China’s A-shares market. Financial Times

Chinese Interest

China’s central bank has moved to boost the economy by changing how commercial lenders set interest rates. The change should make borrowing cheaper for small businesses, as lenders will now base the interest rates on their loans on the same reference they use to calculate interest for their most creditworthy clients. CNBC

This edition of CEO Daily was edited by David Meyer. Find previous editions here, and sign up for other Fortune newsletters here.