October 21, 2016
Professor Dorff Publishes Article in The Atlantic
In Professor Michael Dorff’s new article in The Atlantic, he ponders the question: Can a corporation have a soul? More precisely, can a for-profit company care about something more than increasing its shareholders’ earnings and take actions to support initiatives that don’t boost the bottom line?
Specifically, Professor Dorff compares the community-friendly efforts of current Ford Motor Company CEO Mark Fields to those of founder Henry Ford, who fought vigorously to give money to social programs, even after his investors sued him.
Professor Dorff writes: “Though Dodge v. Ford Motor is usually cited as requiring companies to operate solely for their shareholders’ benefits, it actually pushes for a broader deference to boards’ judgment. Faced with evaluating Henry Ford’s clear and unambiguous statement that his purpose was not to make money for the company’s shareholders, the court granted him permission to do what he liked, essentially saying that anyone as successful as Ford must have been furthering a plan to boost profits in the long run, even if his plans seemed to limit profits in the short run and even if he explicitly said he had little interest in lining shareholders’ pockets.”
He concludes: “In the absence of any radical new regulations, for American-style capitalism to work again for the middle class as well as for the wealthy, more CEOs like Fields are going to have to adopt ambitious plans for implementing Henry Ford’s advice, plans that stretch far beyond making some charitable donations and implementing sustainability initiatives. They are going to have to give their companies true souls.”
Read the full article here.