Veeva Systems (VEEV +0.15%), a software-as-a-service company, recently became a public benefit corporation. Rather than being strictly focused on making money for shareholders, the company's new charter requires it to also be focused on the best interests of its employees and customers, which are primarily drug companies that use Veeva's software for managing relationships with doctors and clinical trial data.
In this video from Motley Fool Live, recorded March 8, Fool.com contributors Brian Orelli and Keith Speights discuss the change in the company's charter and whether Veeva could be a trendsetter.
Brian Orelli: Veeva became a public benefit corporation. This was a new term to me when we first announced it, but as I understand it, rather than being strictly beholden to shareholders now the company's legal charter reflects that it's committed to all stakeholders, including customers, employees, and shareholders. This is the first public company to make the switch to being a public benefit corporation. The shareholders approved the conversion with 99% voting in favor of the proposal.
I'm a little torn on how I feel about this. On one hand, good companies look out for customers and employees and keeping them happy usually benefits shareholders in the long run. As an investor -- I'm talking generally here because I don't own shares of Veeva -- I want my companies to be legally responsible to me. What do you think Keith, is Veeva revolutionary or crazy?
Keith Speights: [laughs] Good question. I think revolutionary for sure. Veeva is the first public company to become PBC or a public benefit corporation. They're a trailblazer for sure. So revolutionary, absolutely.
Now, there are some private companies that have gone that path. Ben and Jerry's, for example, and Patagonia. There've been some private companies that have taken the PBC route, but Veeva is the first public company to do it.
Probably not a crazy move. I think it remains to be seen. In theory, taking this route could enable Veeva to attract new customers. Obviously, if they've built into their charter that they're looking out for the best interest of their customers, it could help them attract really highly qualified employees since they're also included in that group of stakeholders. It could help them over the long run. I think the company thinks that their financial possibilities will be just as good if not stronger by taking this approach. I think we'll see. I did notice that the Veeva CEO Peter Gassner said in their Q4 conference call that other companies have talked to Veeva about this PBC approach. So we might -- might -- see other companies follow suit, but I personally think it will be a trickle and not a flood.
Orelli: Yeah. I think most companies are going to want to keep their shareholders first even if they are doing exactly the same thing that Veeva is doing in keeping customers and employees happy.
Speights: Yeah.
