14 Dec 2023 Stefan Padfield: Asked About Its $244 Million BLM Donation, Microsoft Told Its Investors to Pound Sand

After Microsoft and hundreds of other corporations squandered billions of dollars on the altar of Black Lives Matter, and after Anheuser-Busch, Target, Disney and Dick’s Sporting Goods decimated their bottom lines in order to satisfy the whims of their woke CEOs, what advice can we give to other corporate leaders who want to avoid becoming Woke-And-Broke?

In a commentary published by The Hill, Free Enterprise Project Deputy Director Stefan Padfield reminds us that “to ignore the bottom line is a per se violation of a CEO’s fiduciary duties” and suggests a policy that all responsible companies should use to determine when and how to engage in politically divisive issues.

Stefan’s column is below.

I attended Microsoft’s annual meeting on Dec. 7, 2023, as a representative of the National Center for Public Policy Research, which owns shares in Microsoft. At the meeting, I submitted a question.

Stefan Padfield

“According to the Claremont Institute’s Black Lives Matter (BLM) Funding Database,” I began, “Microsoft has contributed almost a quarter of a billion dollars to the BLM movement and related causes since 2020. This was done despite warnings at the time that BLM has neo-Marxist roots, pushes Anti-American values and promotes policies like defunding the police that harm the very communities it claims to help. Since that time, reports of mismanagement and self-dealing have raised serious questions about BLM’s use of donated funds. Most recently, BLM aligned itself with antisemitism by promoting pro-Hamas imagery in the aftermath of the Oct. 7 terrorist attacks on Israel. In light of all this, is Microsoft now prepared to admit its support of BLM was a mistake and renounce that support?”

Microsoft never answered the question. It’s unclear why, but Microsoft does provide a list of reasons it claims grant it the right to tell shareholders who own the company to go pound sand including, among other things, if it deems a submitted question to be “in bad taste.”

Perhaps relatedly, Microsoft did answer a general question regarding how it keeps “political ideology out of business decisions.” Unfortunately, the multi-paragraph answer provided absolutely no principle that shareholders could rely on to keep the political and ideological biases of relevant corporate decision-makers out of Microsoft’s decisionmaking.

Rather, according to Brad Smith, Microsoft’s vice chair and president, anything that has an impact on customers, on the protection of employees or on business interests could justify Microsoft speaking or acting out “in the company’s name.” I submit that it would be impossible to come up with any divisive issue of our day that would be off-limits under these vague guidelines. Indeed, this is particularly evident in light of the current trend of labeling as a “safety” issue anything that offends even a single employee.

Of the three, “business interests” is the only justification offered that has any legitimacy. On that score, here are two phrases that were shockingly absent from these assurances: “expected value” and “shareholder value.”

Accordingly, here’s what I submit should be every corporation’s policy when it comes to engaging in politically divisive issues: “We engage in politically divisive issues when we have concluded that the engagement creates positive expected value for our shareholders, accounting for all reasonably foreseeable costs including opportunity costs.”

This policy would ensure that corporate decisionmakers are in fact acting in compliance with their fiduciary duties of care, loyalty and good faith. And it requires the corporation to be able to produce documentation of timely expected value calculations to justify such ideological involvement.

Contrast this with the proclamations of CEOs posing as philosopher kings, as when Apple CEO Tim Cook told shareholders, “When we work on making our devices accessible by the blind, I don’t consider the bloody” return on investment. Or consider when Ed Stack, the chairman and chief executive of Dick’s Sporting Goods, decided that Dick’s should “take a stand” on gun violence by foregoing the sale of assault-style weapons, and said in connection therewith, “I don’t really care what the financial implication is.”

Certainly, corporations are free to engage in fully-informed, tax-deductible charitable ventures for moral reasons and the accompanying good will. But to ignore the bottom line is a per se violation of a CEO’s fiduciary duties.

It is fair to assert that brands like Bud Light, Disney and Target have seen their share prices decimated recently because they seemingly allowed the political and ideological biases of their decisionmakers to infect their corporate cultures. They often include the creation of left-wing echo chambers that masquerade as sources of constructive feedback, but then they can’t imagine anyone objecting to the corporation marching in lock-step with the leftist activism that elevates being on “the right side of history” (as defined by leftists) above competing fiduciary duties.

Shareholders and consumers are sick of politicized corporations sacrificing the creation of value-generating goods and services at the altar of “stakeholder capitalism,” “ESG,” “DEI” or any of the other left-wing Trojan horses that have been infiltrating and corrupting American corporations.

Getting back to neutral by recentering the corporate North Star on the creation of positive expected value for shareholders is thus critical. History shows that doing so will actually end up creating the most value for society as well. It’s called capitalism, the thing that has brought our nation and our world to the cusp of eradicating poverty and stands the best chance of solving our other most pressing problems.

It bears repeating that “stakeholder capitalism” is no more capitalism than a “hot dog” is a dog.

Stefan Padfield is deputy director of the National Center’s Free Enterprise Project. This was initially published bg The Hill.