Introduction
In 2019, the Business Roundtable (BRT), a fifty-year-old association of American chief executive officers,1 shocked corporate governance theorists with a new statement of corporate purpose, committing to “deliver[ing] value” to all corporate stakeholders, such as consumers, employees, suppliers, and communities.2 Shareholders were included on the list, but only at the very bottom.3 The accompanying press release described the statement as a “[m]ove [a]way from [s]hareholder [p]rimacy.”4
The statement hit like a bombshell. Shareholders protested,5 op-eds debated its significance,6 professors studied its effects,7 law review articles mushroomed.8 The question whether corporations should be run solely to benefit shareholders, or whether instead they should be run to benefit all communities affected by their behavior, has been debated for over 100 years,9 and it appeared as though America’s business elite had radically reshaped the conversation. No longer would corporations fight tooth and nail to avoid new regulation,10 no longer would they aggressively — and illegally — oppose any efforts at unionization,11 no longer would they stall the development of new technologies that could protect the planet from the ravages of climate change.12 Instead, big business would take a holistic view of its responsibilities, recognizing that all of us participate in a shared endeavor to facilitate human flourishing.
Alas, it was not to be. Just six days later, the BRT issued a series of clarifying remarks, including the following:
The Statement is not a repudiation of shareholder interests in favor of political and social goals. Rather, the Statement reflects the fact that for corporations to be successful, durable and return value to shareholders, they must consider the interests and meet the fair expectations of a wide range of stakeholders in addition to shareholders.13
Translation: Corporations would continue to function as a vehicle for increasing shareholder wealth; other constituencies would be accommodated only as instruments to achieve that end. Status quo ante restored.
Professor Stephen Bainbridge’s new book, The Profit Motive: Defending Shareholder Value Maximization, uses the BRT’s original statement as a jumping-off point to offer a spirited defense of shareholder wealth maximization as the ultimate end of corporate governance.14 Beginning with an analysis of classroom standards like Dodge v. Ford Motor Co.,15 and continuing through the modern era, Bainbridge argues both that shareholder value maximization is the legal obligation of corporate boards, and that it should in fact be so, partly because of wealth maximization’s prosocial tendencies, but largely because of the lack of a viable alternative. Drawing on his decades of work as one of America’s most influential corporate governance theorists, Bainbridge offers up sharp critiques of the kind of enlightened managerialism reflected in the BRT’s original statement, and advocated by academics like the late Professor Lynn Stout16 and practitioners like Martin Lipton.17 Along the way, he also has harsh words for trendy alternatives such as “environmental, social, and governance” (ESG) investing and proposals to reform the structure of the corporation itself.
In many ways, The Profit Motive is an essential resource for any theorist, or student, in this field. Deftly intertwining economic theory with sharp anecdotes and historical retrospectives, Bainbridge offers an entertaining account of the realpolitik of corporate functioning and the major legal developments that brought us to where we are today. When it comes to critiques of stakeholderism, however, Bainbridge’s blows land with varying force. Though his analysis of managerialism is thorough and his objections well-taken, he elides the fact that many of today’s stakeholderists are not managerialists, but instead seek to enhance shareholders’ ability to demand more prosocial behavior from their portfolio companies. The difference is significant, because it shifts the conversation away from managerial agency costs to questions of shareholder power and competency. In particular, it raises the possibility that a divided form of corporate government may create, if not more moral corporations, then at least ones that are less capable of inflicting harm on the rest of society.
This Review proceeds in the following parts. In Part I, I explain some of the intellectual history behind the debates over corporate purpose and the approaches taken by modern theorists. In Part II, I explore Bainbridge’s argument that, under current law, corporate directors are required to act to maximize shareholder wealth. In Part III, I critique Bainbridge’s defense of the current regime, with a particular emphasis on teasing out the distinctions among theorists that render Bainbridge’s arguments incomplete. The Conclusion follows.
I. The Corporate Problem
The debate over corporate purpose dates back to the rise of the great corporations in the late nineteenth century.18 The central question is whether corporate managers should operate companies solely to earn profits for the benefit of their shareholders, or whether instead they should run them with a view toward benefitting all of their constituencies.
As Bainbridge recognizes, this is, at bottom, a regulatory problem (p. 10). Managers of public companies direct and coordinate staggering amounts of capital provided by a dispersed and fluid set of investors, and oversee armies of labor provided by employees and contractors. These resources, combined, may exceed those of governments, and as such, depending on how they are deployed, may inflict tremendous costs on society as a whole. The true north for regulatory purposes is to channel corporate discretion, so managers exercise their power with a view toward prosociality rather than self-aggrandizement.
But discretion is by definition impossible to dictate; the fact of its existence makes compliance difficult to gauge.
The earliest and simplest proposal for a discretion-cabining rule was that of shareholder wealth maximization: the requirement that corporate managers attempt to maximize the value of the business for the benefit of its shareholders.19 This “shareholder primacist” orientation has long been defended as prosocial because it prevents managers from co-opting investors’ capital for their own benefit, while other types of antisocial impulses — to make dangerous products or pollute the environment or exploit workers — can be managed through the external regulatory system. Minimum-wage requirements, environmental requirements, product quality requirements, and the like, set floors of acceptable corporate behavior (pp. 86, 90), while markets enable contractual counterparties to refuse to deal with firms that will not ensure fair treatment (p. 89).20
But even a rule of shareholder wealth maximization, easy to articulate, is realistically unenforceable via the court system, due to the challenges of distinguishing a failed business strategy (or one that has yet to come to fruition) from one that was never intended to maximize profit in the first place. That led to what Delaware, the leading jurisdiction for the incorporation of public companies, calls the distinction between the “standard of conduct” and the “standard of review”21: Though corporate directors and officers are, under Delaware law, formally required to act in the “best interests of the corporation and its stockholders” at all times,22 courts will only substantively review their conduct for compliance at the extremes, namely, in situations that present intolerable risks of self-dealing.23 For all other business decisions, courts will defer to managers’ judgment, giving them an exceptional amount of leeway to arrange corporate affairs as they see fit.24 This “business judgment rule” ensures that the practical enforcement of any requirement that managers maximize the value of the equity comes not through judicial command at all, but through the structure of the corporate form, which, among other things, gives only shareholders the right to select corporate directors.
A. The Business Judgment Rule and the Shareholder/Stakeholder Divide
Because the business judgment rule itself precludes any substantive examination of most corporate decisionmaking, for a long time, few cases ever articulated directors’ duties with any precision, and when they did, they couched the standard in terms of a vague invocation of the best interests of the “corporation.”25 That left the formal legal obligation imposed on corporate managers both inscrutable and of questionable relevance. In that space rose a descriptive debate about the content of that obligation, and a normative one about what the obligation should in fact be.
The descriptive debate stemmed from two aspects of the case law. First, the requirement that directors advance the “corporation’s best interests”26 allowed for the possibility that directors were required to accommodate all stakeholders who contribute to corporate functioning, and not merely the shareholders.27 For many years, the clearest judicial pronouncement equating corporate purpose with shareholder wealth maximization specifically arose from the old Dodge v. Ford Motor Co. case, decided by the Supreme Court of Michigan in 1919. There, the court credited Henry Ford’s testimony that he was canceling a shareholder dividend and ploughing funds back into the business in order to “spread the benefits of this industrial system” to his workers so that they might “build up their lives and their homes.”28 In response, the court insisted that “[a] business corporation is organized and carried on primarily for the profit of the stockholders,”29 and may not be transformed into a “semi-eleemosynary institution.”30 It ordered Ford to reinstate the dividend (though it permitted Ford to proceed with his expansion plans).31 Dodge’s forthright articulation of the wealth-maximization principle has made it a staple of business law casebooks, but also of debatable relevance in the modern era (and in the state of Delaware).32
Second, and more generally, the descriptive debate concerned what qualifies as “law.” So long as the business judgment rule ensured there was no enforceable requirement that managers strive to maximize shareholder wealth — so long as the only enforceable requirement was that managers not loot corporate resources for their personal benefit — one could plausibly argue that no such “law” existed in the first place.33
This is what Justice Oliver Wendell Holmes might call the “bad man” view of the law, i.e., that the “law” consists solely of the consequences imposed for transgressions.34 Ironically, in the corporate context, the “bad man” view was in fact a license to do good: if courts would not force managers to pursue profit by the most rapacious means available, managers would be, in a sense, legally free to direct corporate resources for the benefit of a variety of stakeholders.
Viewed through that lens, Dodge was wrongly decided, not so much for its invocation of a duty of shareholder wealth maximization, but for its failure to defer to the board’s judgment as to the most advisable manner of running a business (even in the face of managerial exhortations of the common good).35 Indeed, Shlensky v. Wrigley,36 another classroom chestnut, presents the most direct contrast: despite a controlling shareholder’s insistence that his business decisions were predicated on concern for the local community rather than the corporation itself, an Illinois court refused to take him at his word, invented plausible wealth-maximizing justifications for his actions, and dismissed a shareholder challenge to his stewardship.37
While the descriptive debate played out over what these cases meant, the normative one played out over the social consequences of a profit-maximization principle. Such a rule might have the virtue of channeling managerial discretion away from self-dealing and in favor of shareholders, but it could also redirect it toward exploiting everyone else. And given corporations’ political power, bureaucratic complexity,38 and expertise in the relevant fields that often overshadows that of regulators,39 there remained the possibility that the regulatory and contractual controls trumpeted by shareholder primacists would simply be inadequate to constrain managers’ antisocial impulses (p. 93).40
Over the years, stakeholderist commenters have proposed a variety of solutions to this problem, including by fundamentally altering the corporate structure,41 and, less aggressively, by expanding managers’ fiduciary duties to encompass obligations toward nonshareholder constituencies.42 One of the more prominent of these proposals came from Professors Lynn Stout and Margaret Blair, whose “team production” theory posited that the job of a corporate board is to engender the trust of multiple contributors to the corporate enterprise — including shareholders, creditors, and labor — by balancing their interests and ensuring that no one group exploits the others.43
The normative case for a stakeholder orientation, however, has been sharply criticized for its indeterminacy: if even a rule of wealth maximization is too complex for courts to oversee — and has practical application only through the exercise of shareholder power — how could an obligation to benefit all of society be any more administrable?44 In many cases, the argument for a stakeholder orientation depended less on the formal legal doctrine than on the reality that shareholders did not, in fact, exercise much power at all: dispersed and relatively passive, with few governance rights and facing enormous structural barriers to replacing managers who were insufficiently vigorous in pursuing shareholder interests, the realities of public company governance might allow for just enough “slack” — as Professor Einer Elhauge put it — to enable a degree of managerial magnanimousness toward nonshareholder constituencies.45
B. A “Tectonic Shift”46
In recent years, the nature of corporate governance has changed. A bevy of new legal rules — some of which Bainbridge discusses in his book (pp. 75–76) — have given investors more power to control corporate behavior. Federal regulation of retirement plans encouraged a transition to mutual fund investing, funneling trillions of dollars to a relatively small handful of asset managers,47 and transforming the shareholder base from roughly two-thirds retail in 1979 to over seventy percent institutional today.48 Thus, formerly dispersed and relatively passive retail shareholders gave way to concentrated, sophisticated, and regulated asset managers, complete with legal obligations to exercise their voting power for the benefit of their funds.49 Federal rules that limited the size of private funds were relaxed, supercharging the development of a new class of activist investors who take minority stakes in companies and — with the support of mutual funds and other institutional voters — spur corporate management changes that boost stock prices.50 New federal disclosure requirements, as well as developments in accounting technology, made it easier for shareholders to monitor executives’ performance.51 Federal law encouraged reforms to management compensation schemes, first through tax exemptions for performance bonuses (p. 75),52 and later by mandating that shareholders be given a nonbinding opportunity to approve or disapprove of executive pay (p. 76).53
The result is that legal interventions have enabled shareholders — and share prices — to exert far greater control over managerial conduct than they did even thirty years ago.54 Perhaps more reacting to the shift than driving it, Delaware case law has become much clearer about articulating a formal legal rule that managers have a duty to “maximize value” for the equity holders in “every scenario.”55 Whatever “slack” may have once existed to permit managerial beneficence toward nonshareholder constituencies, little remains of it today.
Proponents of stakeholderism — broadly defined to mean that corporate governance should accommodate the needs of both shareholder and nonshareholder constituencies — have adjusted to this new environment. Today, there is less appetite for arguing that managers’ fiduciary obligations should extend to stakeholders, and more emphasis on the structural soup of incentives that influence managerial behavior. In particular, given the “new shareholder-centric reality,”56 advocates have focused on the duties and incentives of institutional shareholders, and the possibility that they might use their governance rights to advance the social preferences of the human beneficiaries they represent.
As a result, stakeholderists today can roughly be categorized into three basic camps. The first of these, hewing to the original movement, posits that corporations should not be run solely in shareholders’ interests. Instead, corporations should be run to balance the interests of its constituencies: to earn a fair return to investors, but also to provide decent wages and working conditions to employees, useful and safe products to consumers, and refrain from damaging the environment on which the surrounding communities depend. The critical aspect of this version of stakeholderism is that it holds shareholder desires should not exclusively dictate corporate functioning, because, the argument goes, other groups also have claims on managerial loyalty.57 For those who fall into this camp, a lot of today’s thinking centers on how to operationalize these principles in a world of empowered shareholders.58
Another approach to stakeholderism — though, to be fair, stakeholderism is something of a misnomer — is ESG investing, or investing based on “Environmental, Social, Governance” factors. This newly popular concept was first developed by the United Nations as a means to persuade financial institutions to adopt socially responsible principles when overseeing their investments,59 but since then, the phrase has become somewhat infamous for its malleability.60 In today’s parlance, it operates as something of an umbrella term for two distinct strands of stakeholderist thought.61
The first of these — sometimes called “shareholder welfarism”62 — envisions that investors themselves can choose to forego some degree of profit-seeking, and instead demand more prosocial behavior from portfolio companies, either by divesting from bad actors, or by using their voting power to influence corporate policy. They may choose to do so because they exist in society as more than just investors — they are also employees, consumers, and community members — and therefore may have a financial, or simply ethical, preference for corporate social responsibility. This is not truly stakeholderism because it accepts that shareholders exclusively have first claim on any excess value the corporation may generate. It simply recognizes that shareholders themselves may prefer to redirect that value to nonshareholder interests.
The other approach — sometimes called “enlightened shareholder value”63 or “instrumental stakeholderism”64 — proposes that companies may in fact improve their financial performance on shareholders’ behalf if they are more attentive to the needs of nonshareholder constituencies because, in the long term, maintaining strong relationships with employees, customers, and communities ultimately encourages these stakeholders to contribute more to the corporate enterprise. As with “shareholder welfarism,” this approach contends that shareholders have a role to play in promoting corporate prosociality, because corporate managers operate under short-term incentives or informational deficits that preclude them from recognizing the benefits to be derived from prosocial behavior.65
This is the point at which Bainbridge enters the fray.
II. What Is Law?
In the first part of his book, Bainbridge seeks to establish that corporate directors operate under a legal obligation to maximize value for the equity holders. To make his case, Bainbridge reviews the decisions that comprise the standard law school curriculum, like Dodge, Wrigley, and A.P. Smith Manufacturing Co. v. Barlow,66 to demonstrate that, properly interpreted, they stand for the proposition that directors must operate the corporation in a manner that maximizes profits (pp. 27–49). After that introduction, he engages arguments that Dodge does not represent the current state of the law (pp. 50–72). In so doing, he delves a bit into the pre-Dodge history of the wealth-maximization requirement (pp. 51–54) before returning to the usual business class syllabus with Revlon, Inc. v. MacAndrews & Forbes Holdings67 and Unocal Corp. v. Mesa Petroleum Co.,68 as well as some of Delaware’s more recent decisions on the subject (pp. 59–64). Experts in the field are likely already familiar with these decades-long debates over the proper interpretation of the classroom canon, but Bainbridge contextualizes his discussion with a rich factual account of the events that led up to each dispute, helpfully situating it within the larger concerns of its historical era. In that respect, his book provides an invaluable classroom supplement that is sure to be of interest to students and educators alike; these are the kinds of stories that not only provide deeper insights into the material, but also help socialize future business lawyers into a shared legal culture.
As for his interpretation of Delaware law, Bainbridge might have given more credit to the stakeholderist position that he purports to refute. Though Bainbridge is surely correct that Delaware courts — especially in recent years — have repeatedly invoked “the corporate goal of stockholder wealth maximization,”69 Delaware courts have also described managerial fiduciary duties as running to “the corporation and its shareholders,” suggesting these duties must include some consideration for the entity as a whole (and thus all of its constituencies).70 And these duties are, in fact, meaningful ones, at least under some circumstances. This was seen most overtly in North American Catholic Educational Programming Foundation, Inc. v. Gheewalla,71 where the Delaware Supreme Court held that directors’ fiduciary duties to the corporate entity may be enforced by the shareholders of a solvent corporation, but the creditors of an insolvent one — even though directors at no point owe fiduciary obligations to the creditors directly.72 Bainbridge acknowledges the case (p. 23), but not the implication: that the entity as the object of fiduciary attention is recognized under Delaware law, apart from any obligation owed to its shareholders or even its residual claimants. One might go further and conclude that the duty of shareholder wealth maximization ends at the point of making a deliberate choice to render the company unable to pay its creditors (such as, for example, approving a leveraged buyout that will generously compensate the shareholders but layer the company in unsupportable debt).73 After all, Delaware (like other states) requires that corporations refrain from paying dividends once their capitalization levels fall below certain thresholds,74 which further suggests that there are limits to how far opportunism in favor of shareholders can be extended.
That said, even if Bainbridge could have approached this aspect of the book differently, it is hard to argue with his ultimate conclusion that, at least as far as Delaware is concerned, while the company remains solvent, shareholder wealth maximization is formally the legal obligation of a public company board.
Despite that intellectual victory, Bainbridge is perhaps too quick to dismiss the claims of Stout and others in her camp that the business judgment rule — and courts’ general reluctance to interfere with managerial decisionmaking — amounts to a de facto retreat from shareholder wealth maximization (pp. 66–70). He is surely correct that doctrinally, the business judgment rule does no such thing, but the claim (at least in its most persuasive form) is not that doctrinally the rule should be so interpreted; the claim is that courts in practical effect softened the harsh consequences of a shareholder primacist rule by mitigating its application,75 and that “law” should be defined by reference to its real-world effects. That argument cannot be combatted by interpreting the reasoning of the case law, because it rests on the proposition that the reasoning is not where the “law” is actually located.76
Indeed, there is some irony in Bainbridge’s rejection of “law” so defined, because it would have assisted him with his secondary argument, that shareholder primacy reigns even in the thirty non-Delaware jurisdictions that have explicitly adopted “constituency” statutes (pp. 70–72). Pennsylvania’s constituency statute, for example, provides that “the best interests of the corporation” may include consideration of shareholder and nonshareholder interests, and that the board of directors “shall not be required” to regard “the interests of any particular group” as “dominant or controlling.”77 Bainbridge correctly notes that these statutes do not require sacrificing shareholder interests for the interests of nonshareholders (pp. 70–71) — in that sense, they do not impose a “stakeholder” fiduciary duty — but oddly, and contrary to his interpretation when they were first adopted,78 he also maintains they do not permit corporate managers to favor stakeholders over shareholders, despite their relatively straightforward language (p. 71).79
But, even here, Bainbridge is correct if we use the methods he derides in his opponents, namely, identify “law” not in the formal recitation of fiduciary duty, but in the actions that are in fact permitted or required. Though no court would fault a corporate director for favoring employees over shareholders in a constituency jurisdiction (or, for that matter, in Delaware, in most scenarios, due to the business judgment rule), the real drivers of corporate decisonmaking are found not in a courtroom, but in the balance of power between shareholders and managers. In that sense, under most circumstances and in most public companies, managers have very limited ability to favor employees over shareholders, and the wealth-maximization requirement reigns supreme, as Bainbridge demonstrates by recounting how hedge fund activism came for socially responsible Etsy (p. 161). Indeed, Bainbridge himself admits that the structure of the corporate form is as much “corporate law” as the doctrine itself (p. 78). To put it another way, if law is defined as the practical reality of corporate governance, it is fair to say that it is not found in formal articulations of directors’ fiduciary duties.
III. What Is Stakeholderism?
In the second part of his book, Bainbridge gets to the meat of his argument: not only is wealth maximization the law, but it is a good thing that it is the law. Using the BRT Statement as a framing device (pp. 85–104), he considers and then rejects several arguments that might be offered in favor of permitting corporate directors to advance societal objectives. One of his main concerns, that he revisits at various points (pp. 114–17, 134–38, 141–42, 149, 154–56), is the same objection to stakeholderism that has reigned since 1932: that it offers no alternative decision maxim, and therefore in practice licenses managers to reallocate corporate resources according to their own personal preferences.80
With respect to the BRT Statement and similar approaches, Bainbridge is surely on firm ground. The Statement contained no binding promises and offered no explanation for how trade-offs among stakeholders would be made.81 As Bainbridge points out, Martin Lipton — who built his career defending boards from any restrictions on their authority — has endorsed similarly anodyne commitments (pp. 116–17), and, in fact, was a champion of the BRT Statement itself.82 This is hardly surprising: back in the 1980s, Lipton for a brief time managed to persuade the Delaware Supreme Court that boards should have discretion to erect defenses against hostile takeovers in order to protect the interests of employees and surrounding communities,83 before the court retrenched and clarified that stakeholder welfare is only relevant to the extent it instrumentally contributes to stockholder wealth.84 In other words, there is a long history of boards appealing to stakeholderism in order to preserve their own prerogatives, and it is a strategy Lipton has employed for decades.
The challenge for Bainbridge, however, is that, contrary to his claim that “most stakeholder capitalism advocates focus . . . on . . . the fiduciary duties of corporate managers” (p. 146), most stakeholder capitalism advocates do not, in fact, focus on fiduciary duties at all — many avoid them entirely. Instead, they tend to fall into the camps described above, in particular, ESG — which in turn, can either mean shareholder welfarism or enlightened shareholder value — or “pure” stakeholderism, which, rather than resting on director fiduciary duties alone, often includes proposals to redesign the corporate form itself. Bainbridge’s objections to stakeholderism therefore must be evaluated alongside the claims that stakeholderists actually make.
A. Shareholder Welfarism, or Profit-Sacrificing ESG
The key move of shareholder welfarism, or profit-sacrificing ESG, is that it originates from the shareholder side rather than the management side. Corporate managers purport to adopt ESG principles, but the theoretic basis for doing so is that they are responding to shareholder demand. This does, in fact, seem to be the reality: as Professors Cathy Hwang and Yaron Nili document, today, ESG adoption at the company level is usually urged first by shareholders.85
That ESG originates from shareholder demand matters a great deal, because — at least to the extent we are talking about profit-sacrificing versions of ESG — it cuts the legs out from under some of the traditional objections to stakeholderism (and ones that Bainbridge shares), namely, that it offers no decision principle for choosing among constituencies, and that managers have no legitimacy to craft social policy (pp. 94–95, 149–50).86 In other words, ESG is an attempt to solve those earlier problems. Managers would not be unconstrained — they would be following shareholder instructions, communicated through voting, engagement, and market behavior — and legitimacy would come from two places. First, to the extent one imagines the corporation should be run for its shareholders, ESG theory offers a more nuanced portrait of what shareholders actually want, rather than legally flattening all differences between them,87 and second, to the extent the ultimate investors — the ones who stand behind mutual funds and pension funds — are the great mass of America’s workers, consumers, and retirees, their desires would reflect the preferences of the general public, and therefore carry with them a democratic legitimacy similar to government action.88
In truth, though the ESG label may be new, the concept is a very old one. As far back as the early 1900s, theorists argued that investment by retail shareholders would result in greater democratic control over corporate behavior.89 Through the 1950s, women stockholders sought to leverage their voting power to seat women candidates on public company boards,90 and in 1970, Ralph Nader spearheaded what was known as “Campaign GM,” hoping to persuade the shareholders of General Motors to restructure its board to emphasize corporate social responsibility.91 But in those days, shareholders were mostly dispersed individuals, and hard to corral; these efforts rarely succeeded.92 What today’s ESG movement depends upon, then, is the relatively recent institutionalization of the shareholder base — making coordination of enormous amounts of capital far easier to accomplish — as well as, perhaps, new technologies that facilitate retail voting.93
That’s the idea, anyway; the reality, of course, is that profit-sacrificing ESG has yet to live up to its promise, and even without engaging its theoretical underpinnings, Bainbridge ably points out some of the implementation problems (pp. 87–88, 101–04, 158). The essential difficulty is the same one that has always plagued stakeholderism: when values conflict, which take priority? If protecting the environment means shedding jobs, how should the company choose? Is it better to divest from fossil fuel companies entirely, or remain invested and attempt to encourage a transition to green energy? The result is that there are no agreed upon metrics for evaluating corporate ESG performance, and ESG scoring systems are infamous for their inconsistencies (pp. 102, 137, 140–41).94 Though some executive compensation schemes include financial rewards for achieving ESG goals, so far, the incentives are trivial and the goals easily manipulated (pp. 120, 140).95 Large institutional investors often mouth ESG commitments but fail to live up to them in their voting and investment choices (pp. 113, 158–60).96
More fundamentally, however, because Bainbridge either overlooks or ignores the shareholder-centric nature of ESG, he also does not engage the strongest critique of it: that the empowered asset managers on which it depends have no more motivation or legitimacy to make decisions on behalf of the public interest than do the CEOs of operating companies.97 That is, institutional investors are entrusted with the funds of natural persons, frequently workers saving for retirement, and have neither the legal authorization nor the moral high ground to diminish that wealth in order to further some notion of the public good (as judged by portfolio managers).
That said, many ESG proponents readily admit these flaws and advocate for changes that would strengthen the movement, such as more rigorous metrics for assessing corporate social and environmental behavior,98 and improved disclosure of corporate social and environmental performance.99 Advocates have also suggested that institutional investors be forced to attend to the preferences of their ultimate (retail) beneficiaries. This may occur, for example, with greater SEC oversight of fund greenwashing,100 by greater disclosure of mutual fund voting behavior,101 by reforming ERISA and pension plan fiduciary obligations,102 and by requiring mutual fund asset managers to take the preferences of fund investors into account when voting shares.103
One of the more provocative attempts to address the problem of fund manager illegitimacy is the portfolio argument. Theorists like Professors Madison Condon and Jeffrey Gordon accept that institutional investors may only have the motivation and the legal remit to maximize the value of their investments on behalf of their ultimate beneficiaries, but observe that wealth maximization at the level of the portfolio of a diversified institutional investor is not the same as wealth maximization at the level of an individual firm.104 Specifically, certain industries may cause so many negative externalities — fossil fuel companies that contribute to wealth-destroying climate change, for example — that a diversified investor would rather see them reduce their (profitable) activity levels, than continue to generate emissions with devastating consequences for the rest of the economy.105 Or, more simply, a diversified institutional investor may maximize its own wealth by causing some of its portfolio firms to reduce their own. The strength of the portfolio approach, then, is that it offers a model for why institutional investors might pursue profit-sacrificing ESG within existing legal and market frameworks.
No doubt, one might fault all of these ideas. Scholars have argued with some force that market mechanisms prevent shareholders from agreeing to sacrifice profits among themselves,106 that it is impractical or impossible to promote the value of a portfolio by limiting the externalities of specific companies,107 that shareholder voting and engagement cannot communicate clear instructions to corporate managers,108 and that the legitimacy problem persists because the investing public is not reflective of the general public.109 The important point is that these conversations represent the heart of the ESG debate today.
To be sure, profit-sacrificing ESG lies on the fault line of a longstanding tension in corporate law, which is that shareholders are free to vote for any reason at all, but corporate managers are (formally) only permitted to make decisions to benefit the individual firm.110 Scholars perennially offer solutions to this problem, including proposals to minimize the influence of shareholders who are deemed a threat to the corporate polity, such as mutual funds,111 diversified shareholders,112 activist shareholders,113 and hedged shareholders.114 Bainbridge’s longstanding solution has been to minimize shareholder power across the board,115 a project embarrassed by the new trend towards shareholder-centricity and hedge fund activism (p. 163).
This, however, is the fundamental point of the stakeholder position: the corporate orientation toward shareholder wealth maximization is inherently artificial, and requires the constant tinkering of the state to define and maintain.116 Shareholder primacists treat corporate governance as something distinct from governmental regulation, but in today’s world, regulation is constantly being deployed to enact a particular vision of ideal corporate functioning, and so long as that is the case, there is no reason not to use the same tools to encourage an alternative vision.117 To the extent the ESG movement involves sacrificing profits, the goal is to move away from Bainbridge’s “hypothetical bargain,” which presumes shareholders are pure wealth maximizers (p. 154), in favor of surfacing the preferences that shareholders in fact hold. As for directors’ fiduciary duties under this scheme, some have suggested they be reinterpreted to include shareholders’ real-life preferences rather than the presumed preference for wealth maximization,118 but many simply lean into the operational reality of the business judgment rule119: directors cannot, in fact, be legally forced to make wealth-maximizing decisions, and so long as the shareholders support them, they cannot be practically forced to do so, either.120
B. Enlightened Shareholder Value, or Financial ESG
Defenders of shareholder wealth maximization as the sole corporate purpose maintain that profit-seeking is ultimately prosocial, because profits will largely be unattainable via antisocial behavior. Democratically elected governments will adopt regulatory regimes that extract a price for misbehavior; markets — including consumer, labor, and debt markets — will further punish bad actors.121 Corporations will therefore find it more profitable to limit themselves to those activities that society judges to be valuable; the forces of regulation, and the forces of the market, will align investor preferences with those of the broader public.
Bainbridge agrees (pp. 166–68). Throughout his book, he casually identifies all the ways profit seeking results in prosocial behavior. The market punishes corporations that break the law (p. 91), and companies increase their profits by providing strong benefits to employees (p. 133). Exxon shareholders acted out of profit motive when they supported a dissident slate of directors that promised a more aggressive approach to the climate transition (p. 160). When corporations engage in social activism that aligns with their customers’ preferences, sales and stock prices increase (p. 87). Corporations may strengthen relationships with employees and customers by catering to their political and social preferences (pp. 100, 112, 133). Businesses may stave off onerous regulation by highlighting their social commitments (p. 113). Even Henry Ford’s benevolence towards his employees was a feint to forestall an aggressive unionization movement (pp. 30–31).
Given all of this, it is unclear why Bainbridge derides the notion that ESG might have a “business case” (pp. 101–04), or what it is about financial-style ESG that inspires his ire (pp. 21, 94). Reduced to its essentials, financial ESG is nothing more than an attempt to isolate and identify the particular social responsibility measures that will ultimately redound to the corporate benefit. After all, if Bainbridge is correct, and there is no “business case” for socially responsible behavior, that fact should condemn shareholder primacy, rather than justify it. Society must be able to arrange its markets and regulatory apparatus so as to constrain the worst of the negative externalities generated by the corporate form, else there can be no assurances that the benefits conferred by wealth-maximizing corporations exceed the harms they inflict (pp. 166–67),122 which would then only bolster the case for some form of stakeholderism.
Granted, Bainbridge is correct when he argues that there is scant evidence that socially responsible investing strategies outperform the market (p. 103); as Professors Max Schanzenbach and Robert Sitkoff have noted, ESG as a trading strategy may be unsuccessful for the same reason any other active trading strategy fails, that is, markets are efficient and the costs of interpreting information are high.123 And certainly, such a wide variety of policies have been brought under the ESG umbrella that it is doubtful all are wealth maximizing, especially not all at the same firms.124 But if the profit motive means anything, it means that if prosocial behavior is profitable — and Bainbridge claims that it is — companies will tout their prosocial commitments, and investors will identify underpriced good actors and overpriced bad ones. Certainly, the most sophisticated investors in the world are making the attempt, and not cheaply: asset managers and financial advisors are pouring money into climate analytics,125 and many make use of the standards set by the Sustainability Accounting Standards Board (SASB), which developed a ratings and reporting system to identify financially material ESG items in different industries.126 Indeed, despite his denunciation of financial ESG, Bainbridge eventually concedes in a footnote that financial ESG is, ultimately, the same thing as shareholder primacy (p. 104).
To be sure, it is almost certainly the case that activists who in fact favor nonfinancial ESG mask their true intentions with spurious claims of a business case for their preferred corporate social behavior. That is, precisely because corporations are so efficiently constructed to seek profits, those who seek to channel corporate behavior in a particular direction frequently try to make a financial case for it, the strength of which may be less than robust.127 As a result, it is common for skeptics to attack ESG efforts on the grounds that they leech value from firms under a false flag of wealth maximization, and fleece investors with high advisory fees while providing little evidence of improved performance.128 But Bainbridge, though briefly alluding to this complaint (pp. 87–88), seems far less concerned that nonfinancial ESG may masquerade as financial ESG — he believes it impossible that companies would abandon profit seeking under any circumstances (pp. 108–10, 112, 118–21, 151, 161) — than the reverse, which he disparages as “greenwashing” (pp. 87–88, 117–22).129 Greenwashing is a major concern of Bainbridge’s. The BRT statement, he argues, was a type of greenwashing: soothing talk about social responsibility with no agenda for actual change (pp. 112–13, 117–23).
Certainly, if you are an investor, or simply a citizen, who would like to see corporations make meaningful social commitments, then you might be offended by a pretense to social responsibility that lacks follow through. The basis for objection by a self-styled profit maximizer, however, is less clear. According to Bainbridge, even the pretense keeps regulators at bay, satisfies customers, and softens a union-busting agenda. If Dodge demonstrates anything, it’s that companies were putting an altruistic face on profit-seeking long before the ESG acronym was a twinkle in the United Nations’ eye, and surely can be counted on to do so centuries from now. PR springs eternal.
This all makes the reasons behind Bainbridge’s antipathy toward greenwashing somewhat opaque. Is he advocating on behalf of naïve employees and consumers? Well-meaning investors? The book is unclear, but Bainbridge exudes such disdain for the politically liberal causes that comprise the typical ESG agenda — referencing “woke” values and “social justice warriors,” (pp. 105, 108–10, 117), even conjuring a mocking fantasy of CEOs who attempt to placate their overprivileged children home from “posh private schools” where they have been “indoctrinated in social justice politics” (p. 117) — that it is difficult not
to suspect his true objection is expressive. After all, Milton Friedman, the modern Prometheus of shareholder primacy, also bemoaned the social responsibility “window dressing” of his day, because he believed it eroded societal respect for private enterprise — but he admitted it would be hypocritical to demand that business managers forego profitable public relations campaigns out of concern for the state of public discourse.130
C. True Stakeholderism
The final form of stakeholderism — call it “true” stakeholderism — posits that firms should in fact be managed to benefit all constituencies, treating corporations as a cooperative project. In this category belongs the managerialism of the BRT Statement, the team production theory of Blair and Stout, as well as more radical proposals for reforms of the corporate structure.
Bainbridge is thorough in his critiques of this form of stakeholderism, and his objections can roughly be divided between the substantive and the procedural. His substantive argument is that shareholders, with no specific claim on corporate assets, are the most “vulnerable” of corporate stakeholders (p. 88): employees and other constituencies receive contractual protections, as well as the protection of general welfare legislation such as labor, environmental, and consumer laws (pp. 89–90), while shareholders receive only the corporate “residual,” or, whatever assets are left over after others receive their due (p. 128). Citing Professor Robert Miller, Bainbridge points out that to the extent these contractual and legal protections set a “floor” for what nonshareholders will receive, any stakeholderist orientation necessarily means shareholders can only be made worse off, not better, in any balancing model (pp. 155–56).131 For shareholders to be certain of any return at all (let alone one worth the risk of investment), they must be assured that directors will devote their energies to ensuring that plenty is left over for them to claim.
These are longstanding defenses of shareholder primacy, and Bainbridge covers the field thoroughly, though the reader may find it somewhat incongruous to refer to today’s shareholder base as “vulnerable” (a characterization that presumably has never before been applied to the likes of BlackRock and Elliott Investment Management). After all, nonshareholders are not the only group protected by “general welfare” legislation; even in a stakeholderist world, there would remain
securities disclosure requirements, market structure regulation, the duties owed to clients by brokers and investment advisors, various prohibitions on managerial self-dealing, and favorable tax treatment of capital gains and dividend income. Shareholders, in other words, are not uniquely bereft of congressional solicitude.
As for procedural concerns, Bainbridge identifies various implementation problems that are likely to accompany a stakeholderist model, and certainly, when it comes to managerialism, as above, Bainbridge convincingly demonstrates why that center cannot hold. Today’s empowered, financially motivated shareholders are unlikely to tolerate sacrifices of their wealth for long (p. 161), and a stakeholderism that depends solely on the goodwill of corporate directors offers neither a mechanism for assessing performance (p. 138) nor a justification for why directors should exercise such public power in the first place (pp. 94–96, 149–50).
Which is precisely why many stakeholderists want to rebuild the corporation from the ground up, chiefly by giving employees and other constituencies a formal role on corporate boards.132 Sometimes, the claim is that multistakeholder governance would actually facilitate information sharing and thereby improve corporate performance,133 but the main appeal is that multistakeholder governance would force corporate managers to attend to the needs of nonshareholders without assuming the role of omniscient guardians of the public. Represented groups would bargain — not hypothetically (pp. 154–55), but actually — to reach the most optimal arrangements among themselves. Bainbridge offers a rapid-fire set of criticisms of these proposals, everything from empirical studies that identify little benefit from Germany’s codetermination system (pp. 145–46) to a “too many cooks” rationale supposing that multiple constituencies will create boardroom friction by jockeying for resources (pp. 141–42, 144).
This last point is an intriguing one because the same observation can be offered as a feature of multistakeholder governance, rather than a bug. As Bainbridge acknowledges, one of the most important issues that stakeholderism is meant to address is that of corporate power (pp. 98–99, 143): Americans in particular have long been suspicious of concentrated power, whether held by politicians or by private actors. Giant corporations have always represented a singular problem because they may control massive swaths of the economy while wielding enough political clout to evade democratic discipline. In a very real sense, they may behave like unelected governments.
The shareholder primacist position is that malign corporate influence should be combatted with countervailing power, i.e., sufficiently developed markets and a robust regulatory regime to render antisocial behavior expensive, and therefore unprofitable.134 In keeping with this view, there is a species of stakeholderist-like proposals that seeks to strengthen these market mechanisms, by providing nonshareholder constituencies sufficient information to bargain with — or shun — antisocial corporate actors.135
But an alternative to strengthening countervailing power is weakening the corporate form itself, to make it less efficient, and therefore less powerful in its pursuit of profit. There is, in fact, a longstanding regulatory tradition exactly along these lines. The earliest corporations, for example, were expected to dissolve after a specified amount of time, were prohibited from holding shares in other companies, and were subject to sharp limits on capitalization136 — measures that ensured that corporations stayed small and unlikely to amass significant political influence. Antitrust law was also seen as a means to limit corporate power, and in addition to its substantive prohibitions on monopolization and conspiracy — that is, prohibitions on particular forms of conduct — it also prohibits competing firms from employing overlapping directors, thus ensuring a form of structural separation.137 In 1935, Congress imposed taxes on intercorporate dividends to discourage pyramid-like holding companies that made it easier to control massive companies with only a small equity investment,138 and Professor Mark Roe has argued that regulation of mutual fund structure was designed to minimize the ability of large financial institutions to exercise control over their portfolio companies.139
Regulators have also, at various times, limited corporate power by imposing cumbersome procedural requirements on corporate action. These friction-generating rules have the effect — and likely the purpose — of making it more difficult for corporations to act, and thus to exert outsized influence in the world. For example, for a long time, corporations could only make major changes, such as charter amendments and mergers, with a unanimous shareholder vote140 — difficult to obtain in many cases, and virtually impossible if the corporation raised significant amounts of capital from a dispersed investor base.141 These strictures limited corporations’ size and ensured they would remain wedded to the narrow purposes for which they were originally chartered. Today, it is likely that at least some advocacy in favor of, say, separation of chair and CEO roles, and shareholder approval of corporate political spending, is intended more to stymie corporate activity than to enhance the quality of decisionmaking.142
Professors Jens Dammann and Horst Eidenmüller argue that a system of codetermination can have a similar effect.143 Their main claim is that concentrated corporate wealth, when controlled entirely by managers who are beholden to shareholders, can be used to undermine democratic institutions (such as, for example, with unlimited political spending).144 If employees are represented in the boardroom, however, then power is deconcentrated among a much more heterogeneous group, making it more difficult to wield.145 Bainbridge cites with approval the conclusions that Dammann and Eidenmüller reached in an earlier article, that codetermination may impede decisionmaking (p. 144),146 but shortly thereafter, Dammann and Eidenmüller relied on that very fact to conclude that the democracy-preserving effects of such boardroom frictions outweighed any economic harms they might cause.147
D. Cultivating Friction
Boardroom friction might, in the end, be the chief virtue of ESG investing, as well, regardless of how ESG is defined.
One purported flaw with respect to welfarist ESG is that shareholders are necessarily heterogeneous; they will differ with respect to their social preferences.148 The same may be said even when shareholders seek to maximize their wealth: as Bainbridge points out, shareholders may operate on different timelines or have different notions as to the most profitable course of action (pp. 68, 160–61). Introducing the “enlightened shareholder value” concept into the mix only magnifies these problems, because the number of variables to consider, and the longer time frames on which performance is evaluated, makes it even harder to identify optimal strategies.149
Bainbridge has explained, in both this book and in earlier writings, that corporate law’s traditional solution to shareholder heterogeneity is to render it irrelevant, by giving shareholders formal input into only a very small number of corporate decisions (pp. 68–69).150 Corporations are therefore able to coordinate vast resources under the authority of a single, small group of people — the board of directors — whose fiat authority makes power relatively simple and easy to wield. The wealth-maximization constraint — enforced less through formal legal requirements than through corporate and market structure — ensures that power will be focused, with ruthless efficiency, on a singular end. On some occasions, Delaware courts have gone so far as to hold that director fiduciary duties run to the shares — the financial instruments — rather than the real-life investors who hold them, thus erasing investors themselves from the corporate form entirely.151
Public choice theorists argue that when a unified, dedicated minority is devoted to advancing a particular goal, it may overcome a majority opposition that faces collective action problems and diffuses its energies among multiple priorities.152 In a manner of speaking, that is how corporations are designed; they are streamlined for profit maximization, in a world where few sources of countervailing power (such as unions and consumer advocates) have the same single-mindedness. That efficiency and narrowness of focus, in addition to the concentration of resources enabled by the corporate form, allows corporate lobbying and political interests to have outsized influence in the regulatory sphere.153 The conflicting views of shareholders are eliminated from the equation in order to strengthen corporate power.
In fact, the corporate form has evolved over time to minimize the effects of shareholder heterogeneity. Examples abound: as above, the unanimity voting requirement for mergers and charter amendments was reduced to a majority vote requirement.154 Recently, in response to an influx of either irrational or passive retail shareholders,155 Delaware even relaxed the majority vote requirement for certain types of charter amendments, thus minimizing the impact of dissenting voices.156 Delaware used to limit voting agreements to ten years, but that restriction was eventually removed, enabling shareholders to lock in a homogenous block vote indefinitely.157 Delaware used to closely scrutinize self-interested behavior by controlling shareholders which, as a practical matter, made such behavior costly and difficult to undertake; in 2014, the Supreme Court of Delaware adopted procedures to allow controllers to act without such scrutiny,158 and may be set to loosen those restrictions even further.159 Delaware, and other states following its lead, have recently made it easier to effectuate a takeover of a publicly traded company without going through the expense and delay of a shareholder vote,160 thus making mergers easier and faster to achieve. Even the internal affairs doctrine, which dictates the choice of law applicable to a firm’s governance, has hardened from an imprecise standard generally favoring the law of the organizing state into an implacable requirement,161 which provides more certainty to corporate planners and thus eases decision-making.
Disclosure requirements imposed by the SEC focus on matters relevant to financial performance exclusively, making it difficult for investors even to express a preference for anything other than wealth maximization.162 Courts participate in the same project by adopting doctrines, such as the concept of “puffery,” that treat representations pertaining to corporate governance and social behavior as categorically immaterial to investors, thus precluding any remedies for misrepresentations on these subjects and, in practical effect, making it more difficult for investors to police the quality of internal corporate decisionmaking procedures.163
Mutual fund investing was popularized in part due to changes to the tax code and the adoption of ERISA,164 and mutual funds are subject to a host of rules that ensure a general level of similarity of preference: among other things, they must be diversified,165 liquid,166 and relatively passive with respect to their role in corporate governance;167 receive limited or no performance-based compensation;168 equalize voting rights among investors;169 and — due to rules governing the construction of 401(k) menus — are strongly encouraged to focus on financial performance while eschewing any attempt to achieve social goals.170 Meanwhile, ERISA requires pension funds to invest with a view to maximizing fund returns, even if such investments might be contrary to the interests of the funds’ employee-beneficiaries.171
One mechanism by which shareholders have traditionally sought a voice in corporate governance — and thus the ability to express actual preferences as opposed to legally presumed ones — has been through the use of shareholder proposals under Rule 14a-8.172 However, the SEC recently adopted a number of amendments to make that rule more difficult for shareholders to access.173
The upshot is that a thick web of legal standards streamline corporate functioning as much as possible,174 while optimizing for profit maximization and stamping out any hint that investors may prefer anything else.175
Thus, while Dammann and Eidenmüller argue that shareholder homogeneity enables the efficiency of decisionmaking that contributes to corporate power,176 it is important to recognize that homogeneity is not a natural feature of the landscape; it is a product of this legal structure, which presumes a singular preference on investors’ behalf, and conveniently eliminates most paths by which contrary preferences can be expressed. This is by design; the theory has been that accommodating heterogeneity would disrupt corporate functioning by pulling management in different directions and preventing businesses from executing a singular strategy.177
What ESG investing actually does, then, as a practical matter, is create a permission structure for shareholders to seek information about, and express preferences over, a broad range of corporate conduct, often offering disparate and conflicting views. It surfaces and empowers a heterogeneity among shareholder preferences that corporate managers increasingly feel the need to accommodate, at least to some degree. Whether ESG is pursued for its financial value, or its social value, may matter less than that it creates visible disagreement, requiring corporate managers to placate different shareholder constituencies. Professors Yaron Nili and Roy Shapira warn that directors feel “overwhelmed with the scope and complexity of their newfound ESG responsibilities,”178 and that pressure to appoint new board members with domain-specific ESG expertise may “disrupt the functioning of the board as a group,” resulting in a less cohesive board overall.179 In other words, ESG may fracture the unitary vision that has given the corporate form such power.180 From a shareholder primacist perspective, that is precisely why it should be stamped out; but if one is concerned that the legal technology of the corporation is too efficient in overcoming societal guardrails, this is a virtue to be cultivated.
As ESG has become politically controversial, mutual funds have sought to avoid the spotlight by passing on voting power to their beneficiaries — in some cases, other institutions (such as pension funds181), and in others, retail shareholders.182 New technologies are being employed to make it easier for retail shareholders to express preferences, as well.183 One risk is that the resulting vote dispersion may reduce shareholder power across the board,184 but another possibility is that an empowered shareholder base will continue to divide management focus, thus perhaps reversing decades of optimizing the corporate form for a perfect and societally dangerous efficiency.
Conclusion
Far more interesting than the BRT’s Statement is the question why, just a few days later, the BRT felt it necessary to offer bland reaffirmations of shareholder primacy.185 Almost certainly, the BRT was reacting to the firestorm of criticism it received from a number of shareholder-aligned groups, such as, as Bainbridge points out, the Council of Institutional Investors (CII) (pp. 165–66). The CII might be viewed as a surprising source of criticism: as an association consisting of pension plans, the CII is populated by some of the most vocal proponents of ESG approaches to corporate governance.186 Its objection, then, suggests it did not view the Statement as aligned with ESG at all.
That is the schism that The Profit Motive does not interrogate. The book provides the reader with a thorough and entertaining explanation of the logic of shareholder wealth maximization, but in conflating all forms of stakeholderism, Bainbridge leaves unanswered the key question dominating today’s debate: who decides? The BRT envisioned that it would be management’s responsibility to allocate corporate surplus among various stakeholders, and it was that division of authority that the CII likely found most problematic.187
That said, despite the philosophical differences among various stakeholderist approaches, there is at least one unifying mechanism of action: by introducing a new source of demand on board attention, stakeholder claims can weaken corporate power vis-a-vis society at large, and thus prevent corporations from distorting public policy in favor of capital, to the detriment of other constituencies. That’s the benign story, anyway: an alternative potential outcome is that new shareholder demands will carry exactly as much weight as their voting power, enabling some shareholder groups to extract economic rents to vindicate their private interests. There is no obvious way to distinguish legitimate bargaining among various interest groups from illegitimate exploitation; indeed, the shareholder wealth maximization norm itself likely originated out of concern that dominant shareholders would otherwise use their power to tunnel wealth away from minority investors.188 While one can imagine the societal good that flows from directors sacrificing profits to benefit consumers and employees, sacrificing profits so they can be redirected to shareholder factions would be a much less satisfying outcome, both for capital raising and innovation generally, and for investor welfare specifically. The more that corporate boards are forced to attend to the interests of different shareholder groups, the more that problem may once again come to the fore.
So Bainbridge is correct that the BRT Statement and its aftermath tell the story of today’s stakeholderism. The story it tells, ironically, centers the shareholders after all.
* Associate Dean for Faculty Research and Michael M. Fleishman Associate Professor in
Business Law and Entrepreneurship, Tulane Law School and the Murphy Institute. I am grateful for the thoughtful comments of Adam Feibelman, Jill Fisch, Donald Langevoort, and Adriana Robertson.