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A few years ago, a wonderfully outspoken member of the institutional investor community congratulated me on a corporate governance award I’d received.  She apologized for not being able to make it to the awards ceremony, referring to it – very aptly, IMHO – as the “nerd prom.”

Well, we’ve progressed from the nerd prom to a nerd war – specifically, the nasty fight over the August 19 Statement on the Purpose of the Corporation, signed by 181 CEO members of The Business Roundtable.  The Statement suggested that the shareholder-centric model of the modern American corporation needs to be changed and that “we share a fundamental commitment to all of our stakeholders.”  The stakeholders listed in the Statement were customers, employees, suppliers, and the communities in which the companies operate; however, other stakeholders were referred or alluded to, such as the environment.  And the final bullet point in the list stated that the signers were committed to:

“Generating long-term value for shareholders, who provide the capital that allows companies to invest, grow and innovate. We are committed to transparency and effective engagement with shareholders.”

To say that a kerfuffle ensued would be putting it mildly.  The day the Statement came out, The Wall Street Journal ran an opinion piece entitled “The ‘Stakeholder’ CEOs –Executives who abandon shareholders won’t appease the socialists.”  And the following day, the same paper ran another opinion piece: “CEOs for President Warren – The Business Roundtable throws shareholders under the bus,” including a video clip entitled “Big Business CEOs Put Shareholders Last.”

OK, you say – we all know that the Journal’s editorial policies are slightly to the right of Attila the Hun.  But then, the Council of Institutional Investors – yes, that Council – joined in the condemnation.  In an announcement issued just hours after the BRT Statement was published, the Council took issue with the BRT, saying that the Statement “undercuts notions of managerial accountability to shareholders”; that it “place[s] shareholders last, referencing [them] simply as providers of capital rather than owners”; that “boards and managers need to sustain a focus on long-term shareholder value”; and, most damningly, that “[a]ccountability to everyone means accountability to no one.” Whew!  The announcement seemed to lament that the Council and the BRT had had a “productive relationship” with the BRT, making the Council sound a bit like a jilted lover, declaring “you’re dead to me!” and walking off in a huff.

The Council later issued a clarification of sorts, presumably because so many of its members have been pushing hard for companies to have a “social purpose” and to embrace sustainability and all that it entails.  The clarification included a mark-up of the Statement showing how the Council would have worded it; interestingly, the only real change was to move the reference to shareholders to the top of the list instead of at the bottom.

As this posting is being drafted (in mid-September), the nerd war continues.  The Journal continues to pump out nastygrams about the Statement, such as “A Reminder for CEOs Considering a Shift in Focus: Shareholders Are Still King” (revealing a bit of gender insensitivity – why not Queen?).  It was even mentioned in the paper’s writeup on the passing of T. Boone Pickens; can’t they let the guy rest in peace?  The New York Times weighed in as well, including an August 20 write-up by Andrew Ross Sorkin, IMHO one of the best business journalists around, in which he noted “[s]hareholder democracy seemed like a good idea at the time [but] what we got was shareholder supremacy.”  And the Times pushed out a special edition of its “DealBook” on the subject, including another great piece by Sorkin.

Last (for now), the justifiably redoubtable Wachtell Lipton law firm has jumped on the bandwagon, issuing several articles and other publications that say, in effect, it’s about time we moved away from the shareholder centric model to something broader.

Where does this nerd war lead us?  Well, it’s hard to say, but IMHO much of the verbal punchfest seem to miss a key point, which is that governance and fiduciary duties and other nerdy passions are not a zero-sum game.  In other words, if the stakeholders are happy, it doesn’t mean that shareholders won’t be.  In fact, it seems to me that if your stakeholders are happy, your shareholders will likely be too.  And if you alienate your stakeholders – possibly, even only one of them – aren’t you running a great risk that you’ll damage shareholder value?  Who ever heard of a company growing shareholder value by losing customers, ripping off suppliers, and/or losing its workforce?  As for being nice to the environment, where will your raw materials come from if you’ve unthinkingly and uncaringly depleted them?  And so on.

Can’t we all just get along?