Good, for NAU -- Part 1
In a city blessed with natural abundance, and a population committed to enjoying that abundance, Portland, Oregon is a logical home to outdoor clothing and equipment stores. Relatively new on the Portland scene, NAU has differentiated itself by employing a business model that blends profitability and philanthropy. NAU exists, as its website suggests, "to demonstrate the highest levels of citizenship in everything we do: product creation, production, labor practices, the way we treat each other, environmental practices and philanthropy. We believe that companies have a broader responsibility than simply generating profit. That's one reason we're blending profitability and philanthropy, what we believe is the new measure of success."
In other words, NAU practices good corporate citizenship. What is corporate citizenship? I think attorney Robert Hinkley stated it best in his Model Uniform Code for Corporate Citizenship: "The duty of directors shall be to make money for shareholders but not at the expense of the environment, human rights, public health and safety, dignity of employees, and the welfare of the community in which a company operates." NAU included in its corporate documents a set of socially responsible principles, including among other things:
• Permitting directors and officers to consider social and environmental factors in exercising their powers and discharging their duties to the corporation;
• Requiring that 5% of the aggregate purchase price of any product or service sold by the company be contributed to charitable organizations (I always choose Ecotrust); and
• Providing that no officer shall receive cash compensation (exclusive of signing bonuses, stock option grants and other benefits) more than 12 times the compensation of the lowest paid full-time U.S. employee.
These goals are right in line with the newly adopted HB2826 in Oregon that permits a corporation to include a statement in its articles of incorporation about the pursuit of the triple bottom line.
Clients often ask me whether their organizational documents should include similar codes of corporate responsibility. My answer: It depends. While I believe these are noble goals that we and all businesses should aspire to, emerging growth companies only have so many investor opportunities. My experience suggests that investors, even like-minded investors, (and yes there are like-minded investors), struggle with binding statements in organizational documents that may impact a company's ability to achieve its business plan.
