I was deeply saddened this morning to receive word that Lynn Stout had passed away. The notice I received came from Paul Smith, President of the CFA Institute. Lynn had served on the CFA Board of Governors since 2014. Paul captured the essence of Lynn’s professional work and character with this sentence:
She was an internationally recognized expert in corporate governance, financial regulation, and moral behavior—all of which are core to our organization and our industry.
I first met Lynn in Boston in 2013 when she gave a talk about her book, “The Shareholder Value Myth“. The story behind and in the book is deceptively simple. From her time in law school through her early years of teaching law, she had been taught, and in turn taught others, that the purpose of the corporation is to maximize shareholder value. But her reading and research made patently clear that this isn’t true. Shareholder value as the gold standard had no basis in corporate law. The subtitle of the book captures the rest of the story – “How Putting Shareholders First Harms Investors, Corporations and the Public”.
Lynn’s ideas were an influence when I was developing the first BSAS Sustainable Investing seminars. She joined the CFA Institute board around this time, so we were in touch about raising the visibility of sustainable investing – and the moral and governance issues she cared so deeply about – within CFA Institute. Lynn was a source for ideas when I reached out each year as we began planning for that year’s seminar.
I wanted very much to have Lynn speak at one of our seminars. She was willing, and we tried, but were unable to make our November seminar dates work with her busy teaching and travel schedule. With her passing, that opportunity will not come again.
I will be re-reading her book as my small appreciation for her life and work. The Shareholder Value Myth is brief, well-argued and compelling, and simply and clearly written. It will repay the reader many times over for the modest investment of time it takes to read.