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Come hell or high water, one company's not running out

It's an established legal precedent that a publicly-traded business' highest priority is to maximize its stock value, to preserve and protect the owners' investment. CEOs and boards of directors who violate that, who commit their corporation toward any other goal that might affect the bottom line can be and have been sued -- successfully.

It's understandable. Investors are the true owners of the company, while the directors are merely the caretakers. Naturally the owners have a right to assert their will, to protect their property.

But every now and then, a company will buck that obligation, finding some other cause beyond profit worthy, and simply do what they believe is "right" despite what it might do to that sacrosanct stock investment. It's incredibly rare, because it's often led to those directors finding themselves sued or fired.

One of those rare occasions has occurred. One company has decided that, despite the tremendous damage their stores in the South have suffered, they will not cut and run. They have brought in employees from all over, put them up in temporary shelters, and even give away prescriptions simply on the word of the customer -- but they will not pull out of the South.

I think I might need to transfer my prescriptions to CVS soon...

Comments (6)

Having a good reputation in... (Below threshold)

Having a good reputation in the community that comes from something like this is worth more than all the ads you can buy. They made a smart move, they did the right thing morally and that it just happened to be a good business decision isn't a coincidence, about 90% of the time the two go hand-in-hand. I don't think you'd find many stockholders who would disagree. They might even have already picked up a new customer by doing this, you.

I am proud to say that CVS ... (Below threshold)

I am proud to say that CVS is my pharmacy. I'm not sure I've ever gotten my prescriptions anywhere else as an adult responsible for my own.

The 24 hours CVS maybe a mile away is one of the things we'll miss when we move from Stoughton to Middleboro. However, Google Earth says we will have a CVS 0.2 miles away there. Yay! Bonus if it's 24 hours, but I haven't checked yet, and it's not likely.

Cool. Regarding the perscri... (Below threshold)

Cool. Regarding the perscriptions, it's nice to read of one business, at least, that's managed by common sense and not by the perpetual naysayers in the legal and accounting departments.

Jay, The first com... (Below threshold)


The first commenter got it exactly right. Maximizing shareholder value is about more than just a short-sighted exercise in number crunching. (Cut a few costs here, raise a few revenues there and your cash flows go up... Along with the related NPV and share price.)

What drives value? Long term cash flows. Where do those cash flows come from? Revenues minus expenditures. Where do those revenues come from? Customers, mostly. Give customers a reason to choose your company, then your revenues go way up. Similarly, if you give them a reason to remain loyal, your marketing expenses go way down.

I am 100% in favor of the wealth-maximization doctrine. Literally 100%. It is a fallacy shared by many on the left (and some on the right) that wealth maximization somehow conflicts with ethics, morals, compassion, and just generally being a good neighbor.

Reputation has value. Real value. Often, the value of a firm's reputation exceeds the nominal value of all of the assets on its books.

Take Arthur Andersen, for example. When I worked there in the 90's, the firm's reputation was stellar. The firm had almost no assets. Office furniture, some computers, a few small bank accounts, but that's it. No factories, no stores, no inventories, no hordes of cash.. It made billions in revenues based on its reputation.

When its reputation was tarnished, the firm collapsed. Management's short-sighted attempt to avoid the cost of a lawsuit killed the entire firm.

Conversely, CVS is willing to spend a few bucks to establish a reputation as a true neighborhood pharmacy. It cares. It helps communities. It is a partner.

The company will likely be rewarded. This was an excellent business decision. If the CEO and Board of directors were a bunch of soulless puppy-kickers, they would have made this same decision based entirely on dollars and cents.

At stores overwhelmed by cu... (Below threshold)

At stores overwhelmed by customers, CVS hauls trailers filled with vital supplies such as aspirin, batteries, water, and pop tarts into the parking lots.

Yeah, yeah. I understand, but it's still kinda funny.

It's great to hear about those big evil companies like CVS and Wal-Mart step up to the plate at times like these!

Now, if we can just get CVS... (Below threshold)

Now, if we can just get CVS to stop with that silly "discount card" thing, (where, to get many of the better sale prices, you have to have a little credit-card thingy so they can keep track of you) they'll be golden.






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