A Call for Corporations to Focus on the Long Term

Lynn Forester de Rothschild wants to improve capitalism. Ramin Talaie/Bloomberg NewsLynn Forester de Rothschild wants to improve capitalism.

LONDON — Companies should help reduce income inequality and focus more on long-term goals, a new group of supporters of capitalism said on Monday.

In its first paper, the group, called the Henry Jackson Initiative for Inclusive Capitalism, suggests companies should stop reporting earnings quarterly, to encourage investors to think over the longer term.

“Capitalism is very much under siege,” the group wrote. “The recent crisis has highlighted a number of weaknesses in the system.”

The group is led by Dominic Barton, global managing director of McKinsey & Company, and Lynn Forester de Rothschild, whose husband is Sir Evelyn de Rothschild, who runs E. L. Rothschild, a holding company whose investments include a stake in the Economist Group.

It also includes Carly Fiorina, former chief executive of Hewlett-Packard, and Adam Posen, a member of the Bank of England’s monetary policy committee.

The group said companies should reward investors who hold their shares longer by paying, for example, a higher dividend or a bonus. And it said companies should change the way they pay senior executives and reward them more based on long-term goals.

“Compensation decisions taken in relation to short-term criteria have not reflected the long-term interests of the companies concerned,” the group said in its report. “Cases such as these erode popular support for capitalism.”

Ms. de Rothschild said in an interview that she had agreed to join the initiative because she “cares deeply” about improving capitalism.

“I was born in a middle-class family,” Ms. de Rothschild said. “My dad worked two jobs so I could go to law school. I believed that anything was possible for me if I abided by the rules and worked hard. That’s the kind of capitalism I want for the future.”

“I benefited so greatly from the system,” she added, “that I can’t stand by and see it perverted like this.”

Companies need to reduce the gap between executive and average pay, she said.

“A situation where the differential between a chief executive’s compensation and the average worker’s has grown to 380 times today, whereas it used to be less than 40 times, is not sustainable,” Ms. de Rothschild said. “I have deep sympathy with those who find the inequality in the system horrendous.”