Good morning.
The hedge fund attack on Salesforce is being interpreted by some as a shareholder backlash against stakeholder capitalism…similar to previous attacks on Unilever and Danone. And certainly, CEO Marc Benioff is a champion of the stakeholder movement. He founded his company on an innovative “1-1-1” model that dedicates funds and employee time to charity and community service; he has been a relentless campaigner on behalf of oceans and the environment; and he triggered the trend toward CEO activism with his 2015 attack on Indiana’s religious liberties law, which was seen as restricting LGBTQ rights.
But what’s interesting is that even before Salesforce attracted an investment from Paul Singer’s Elliott Management—which clearly is no friend of the stakeholder movement—the company received an investment from Jeffrey Ubben’s and Lynn Forester de Rothschild’s Inclusive Capital Partners, an activist fund founded to support the stakeholder model. While agreeing that Salesforce is undervalued, that it needs to boost profit margins, and that Benioff needs a clear succession plan, Inclusive Capital provided a statement yesterday saying: “Salesforce was founded on the stakeholder model, which is at the core of Inclusive Capital Partner’s mission.” The statement praised the company’s Trailblazer community “as an example of inclusive growth,” and said the company’s effort to build “a high integrity marketplace for reducing emissions on the Salesforce cloud is a big opportunity long term.”
What to make of all this? I confess, I’m not a disinterested observer. Salesforce has been an important partner to Fortune since our independence four years ago, I consider Benioff a friend, and he generously endorsed my book, Tomorrow’s Capitalist. So I’m not in the best position to judge.
But the bigger point is that shareholders and stakeholders can’t be held at odds. Benioff’s approach to his business—which has some similarities to P.T. Barnum’s—has been wildly successful for shareholders during most of the company’s existence. But in the past year, it has stalled, throwing a new light on large marketing budgets, high-profile celebrity events with the likes of will.i.am, and other unique ingredients in the Benioff cookbook. It should be no surprise shareholders are demanding a reset. Don’t assume that means a rejection of the focus on social goals. As Benioff said in a text message last night: “I value all of my stakeholders, especially shareholders. This is the most important thing about stakeholder capitalism.”
More news below.
Alan Murray
@alansmurray
alan.murray@fortune.com
