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AMERICAN UNIVERSITY BUSINESS LAW REVIEW
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any action on such diverse groups as: (1) shareholders; (2) employees ( “of the benefit corporation, its subsidiaries and its suppliers ”); (3) customers; (4) community and society; (5) “the local and global environment ”; (6) “the short and long term interests of the benefit corporation ”; and (7) “the ability of the benefit corporation to accomplish its general public purpose and any specific public benefit purpose. ”120 Since Biblical times, it has been well recognized that people cannot properly serve two masters, much less seven or more.121 Directors would benefit from having a primary master and a clear objective. One of the reasons the shareholder wealth maximization norm has been so widely followed by traditional corporations may be because it provides a clearer corporate objective than many of the argued-for alternatives.122 Without clear guidance and without a clear master, many directors of benefit corporations and other social enterprises will likely default to seeking their own self-interest or their own objectives.123 Professor Lynn Stout and others reject the need for a single metric and have argued that directors, like other human beings, balance the interest of various corporate stakeholders.124 Among other examples of balancing by human beings, Professor Stout points to the ability of people to balance
120. See, e.g., MODEL BENEFIT CORP. LEGIS. § 301(a); see also Murray, supra note 92 (showing the standard of conduct for directors adopted by the various states, which track, in most instances, the model legislation). The mandatory nature of this provision of the benefit corporation statutes differentiates benefit corporation statutes from most constituency statutes and from the flexible purpose and social purpose statutes. See supra Part II.C. 121. Luke 16:13 ( “No one can serve two masters. Either you will hate the one and love the other, or you will be devoted to the one and despise the other. You cannot serve both God and money. ”). 122. Having shareholders as the focus of directorial attention may also make matters (relatively) easier for judges. Strine, The Social Responsibility of Boards of Directors and Stockholders in Charge of Control Transactions, supra note 24, at 1173 n.11 ( “By permitting directors to justify their actions by reference to more diffuse concerns [than those of shareholders], the (already challenging) judicial task of adjudicating fiduciary compliance arguably becomes impossible. ”). This Article does not argue that the shareholder wealth maximization norm provides perfectly clear guidance for directors of traditional corporations, but merely that it provides better guidance than other proposed alternatives. For example, shareholders often have conflicting interests due to, among other things, varied investment time horizons. Bainbridge, Director Primacy and Shareholder Disempowerment, supra note 41, at 1745. 123. See Roe, supra note 33, at 2065 ( “[A] stakeholder measure of managerial accountability could leave managers so much discretion that managers could easily pursue their own agenda. ”); Stephen M. Bainbridge, Interpreting Nonshareholder Constituency Statutes, 19 PEPP. L. REV. 971, 1013 (1992) ( “There is a very real possibility that unscrupulous directors will use nonshareholder interests to cloak their own self-interested behavior. ”). 124. STOUT, supra note 18, at 107 –09 (arguing that the need for a single metric, championed by economist Michael Jenson in his article Value Maximization, Stakeholder Theory, and the Corporate Objective Function, 12 BUS. ETHICS Q. 235, 238 (Apr. 2002), is overstated and “ignores the obvious human capacity to balance ”).