*{Who are companies for? [http://www.weforum.org/site/knowledgenavigator.nsf/Content/Who+are+companies+for%3F?open&topic_id=300250000&theme_id=300]

            29.01.2000

            Annual Meeting 2000}

            Moderator John H. Bryan, Co-Chairman of the Annual Meeting 2000 and Chairman and Chief Executive Officer of Sara Lee Corporation, USA, said from a US fiduciary point of view, corporations are there to benefit shareholders first and foremost, with all other interests being derivative. In practice, companies have to consider the interests of other stakeholders - consumers, employees and civil society as a whole. This "model" exists in some form or other in Europe and Japan. On the whole, companies are compelled to balance the interests of the various stakeholders as part of good business practice and legal obligations. From a philosophical point of view, he believes that "companies are there to serve society".

            "Globalization has to create value for everyone not just shareholders," said Jacques Manardo, Global Managing Partner for Strategic Clients at Deloitte Touche Tohmatsu, France. Good corporate governance is essential for this to happen. The recent Asian crisis and the slide of the euro have highlighted the importance of transparency and information in the global economy. He believes that the harmonization of financial reporting, auditing and governance are the "three corners of a virtuous triangle" of business conduct. He reported that a number of global initiatives are under way to harmonize financial reporting and auditing standards. Corporate governance standards are harder to establish, he warned. While it is not easy to come up with a global lexicon, he feels that progress will be made if initiatives are inclusive, consider the element of competition and cultural diversity, and do not emphasize only the interests of the institutional investors and minority shareholders.

            Rahul Bajaj, Chairman and Managing Director of Bajaj Auto Limited, India, reminded the gathering that people do not create companies to create jobs. Job creation is just a consequence, he continued. Bajaj maintains that customer and shareholder considerations are most important but acknowledges that once in business, the interests of employees and civil society cannot be wished away. In the India of a decade ago, the tax-ridden, high regulation environment forced business to look out for number one and ignore the needs of other stakeholders. Recent structural changes have engineered a corporate rethinking. He is part of a group appointed to draft a code of corporate governance in India - and the code has since been circulated. The ultimate enforcer of responsible governance is competition, and the three keys to governance are maximization of shareholder value, transparency and accurate disclosure. Without these keys, investors will vote with their feet, he warned.

            In Japan, the drive towards a more responsible corporate governance is due to both internal and external factors, Teruo Masaki, Senior Managing Director, Sony Corporation of Japan, intimated. More specifically, the recession following the "economic overheat" and globalization are responsible. Companies realize that the old values have become obsolete and an overhaul is inevitable. Although companies cater for shareholders in Japan they also focus on the interests of employees and funding institutions. As part of a corporate governance overhaul the emphasis on funding institutions and lifetime employment is being reviewed.

            Arthur Levitt Jr, Chairman of the Securities and Exchange Commission (SEC), USA, thinks that events such as "Seattle" illustrate an undercurrent of discontent among various stakeholders. These warning signals should not be ignored. Millions of investors out there have not yet experienced a "big bust" but will be very distressed when it finally occurs. Corporations can have a soul, he said. Leading companies are those that give back to society and focus on long-term strategic planning rather than obsess over short-term share prices. Levitt also believes that responsible accounting disclosure and independent auditing are an integral part of a corporate soul or conscience. The widening gap between the haves and have-nots will increase social risks in the global economy if companies do not improve corporate governance.

            The discussion on corporate governance illustrated the complexity of the issue and suggested a global code can only be reached by involving all the relevant stakeholders both at the national and global levels.
                        *{Contributors:       Bajaj Rahul
                  Levitt Arthur
                  Manardo Jacques
                  Masaki Teruo}