Marty Lipton, the legendary foe of short-termism, speaks with Brunswick’s Lucy Parker about his career-long push for business to serve all stakeholders.
In August of 2019, the Business Roundtable’s annual statement for the first time since the 1970s described the purpose of a corporation as serving all stakeholders, not just shareholders. That watershed moment was brought about in part by the lifelong work of one man: Marty Lipton.
A founding partner of the New York law firm of Wachtell Lipton Rosen & Katz, Mr. Lipton has been fighting short-termism and defending corporations against shareholder activism since the 1970s. He pioneered the so-called “poison pill” and other corporate defenses against raiders and helped write groundbreaking legislation in the 1980s. Appearing in 2016, his 19-page treatise, “The New Paradigm,” spelled out exactly how businesses can and must be of benefit to all stakeholders, laying the groundwork for the Business Roundtable move a few years later.
For this issue of the Brunswick Social Value Review the legendary lawyer joined the head of Brunswick’s Business and Society practice, Lucy Parker, herself a longtime proponent of social value in the corporate arena, to discuss the current outlook.
The last few years have seen dramatic change in the mindset of corporate leadership. Amid the growing calls for businesses to address climate change, the pandemic has pushed issues of inequality into the foreground for business leaders. In response, the conversation in boardrooms has decidedly turned, not to the detriment of shareholders, but to the inclusion of broader societal value.
Mr. Lipton has argued for decades that corporations must look beyond the C-suite, to focus on employees, and the resilience of the economy, capitalism and democracy, pushing back on the notion, popularized by Nobel Prize-winning economist Milton Friedman, that a public company should by rights be focused primarily on making a profit for shareholders.
“I was never a lone voice in the desert,” he says. “The New Paradigm” was written simply “to overcome any continuing, lingering thought that the shareholders own the company and can run it any way they want. It has never been true the that shareholders own the company. It was a misconception that caught hold.”
Lucy Parker is co-author of the book Everybody’s Business: The Unlikely Story of How Big Business Can Fix the World and brings to the table more than 20 years’ experience in helping global companies engage with the role they play in society. She and Mr. Lipton exchanged observations on the future of business, how the pandemic is shaping society’s attitudes toward reforms, and the important role regulation, or the threat of regulation, can play.
Their conversation took place over Zoom, Ms. Parker from her home in London and Mr. Lipton from his in New York.