Bezos Putting Gay Rights Ahead Of Shareholders' Rights In Amazon HQ Hunt

|
Posted: May 24, 2018 11:04 AM
Bezos Putting Gay Rights Ahead Of Shareholders' Rights In Amazon HQ Hunt

Founders of a company have two options: keep the company private or go public.

For the sake of clarity and space, let's assume the CEO is also the founder of the company.
 
 If the CEO decides to keep the company private, he is welcome to run the company as he pleases. He can choose to ignore the advice of everyone around him. He doesn't have to apologize when things go badly, and he can take the credit when things go well. In general, running a privately held company allows for all the freedom the CEO desires.
 
 The downside, some might say, to running a privately held company is generating capital. The CEO must be mindful when spending money because it is limited. Without investment managers and willing investors funneling money into the company by buying stock or buying debt, the company's resources are a bit more limited. 

On the other hand, the CEO of a public company, one that allows individual and institutional investors to buy stock and debt in the company has a different role. This CEO must answer to shareholders. Since a publicly traded company allows investors to purchase stock shares, groups like the SEC require a certain amount of accountability. 

Lately it seems CEO's have forgotten that they have a responsibility to their shareholders. 

Take for example the recent bad behavior by Tesla CEO Elon Musk during the Tesla earnings report. During a Q&A portion of the call Musk was asked about Tesla's capital requirements and an update on Model 3 production. Rather than answering the honest questions and showing respect to his shareholders, he made the following comments:

“Boring, bonehead questions are not cool — next,” and, “These questions are so dry. They’re killing me.”

Clearly Elon Musk has forgotten that his entire company is reliant on money from outside his company. Tesla is, after all, not a profitable company. In fact, to date, Tesla has not made a profit. The company relies heavily on subsidized funds from the federal government and investors. It has been reportedthat since going public in 2010, Tesla has been profitable in just two quarters (2013 and 2016) while losing a total of $4.6 billion dollars.
 
 Any CEO of a publicly traded company that relies on other people's money to conduct business should treat questions about his company with more respect. Showing such contempt for shareholders as Musk has is no way to run a company.
 
 Maybe Jeff Bezos, the founder of Amazon will do better at respecting shareholders money.
 
 Maybe not.
 
 Everyone knows Amazon is looking for just the right place to build their massive HQ2 facility. Cities and states have been rolling out the red carpet to Bezos ad Amazon trying to entice the company to “choose me.” With 50,000 jobs planned and a $5 billion capital investment the opportunity to bring Amazon to a city near you is looming large.
 
 What criteria would be important for selecting a location to build a corporate office? Things like state and local taxes, a business-friendly environment, zoning laws, access to a large work force, and perhaps transportation routes. These criteria certainly seem important for any company seeking to be profitable and maximize the return on shareholders investment. And yet, it appears Bezos is more interested in finding a home in a place that is LGBT friendly.
 
 Sources close to Bezos and members of the scout team say the Amazon founder would consider eliminating locations based on the LGBT environment. This means many states that present the best financial opportunity could potentially be eliminated from contention. As the Washington Post comments:

“But many of the states being criticized — among them Georgia, Indiana, North Carolina and Texas — are among the least expensive of the options, providing a low tax environment the company covets. That could force Bezos to choose between getting the best deal for his new headquarters and supporting gay rights.”

The states being criticized, Georgia, Indiana, North Carolina, and Texas, are being criticized for their refusal to indulge the sexual revolution and change the way they view gender and sexuality. Because they maintain traditional ideas of gender and sexuality Amazon appears willing to ignore the fact that they are the best locations for HQ2. 

Then again, wherever Amazon lands is sure to experience a liberalization in state and local politics to some degree. Maybe states that value the historical understanding of gender and sexuality don't want Amazon coming in and influencing their politics and values. 

CEO's of publicly traded companies have a responsibility to their shareholders to do all they can to be as profitable as they can be. Every decision has this one underlying objective. CEO's must put aside their ego's and their political agenda's to do what is best for their companies and their shareholders. 

If Musk and Bezos ignore their shareholders, what kind of boss are they? Maybe the negative stories coming out of these companies concerning cash flow, spending, and worker conditions need more attention.