A public market for investing long term became a reality Wednesday with the launch of the Long-Term Stock Exchange.
Nine years in the making, the LTSE began full trading operations Wednesday. Companies that list shares will be required to publish policies focusing on long-term value creation and provide shareholders and other stakeholders with insight into how the companies will operate for the long term.
Those policies must address the exchange's five principles for listing companies:
- Consider a broader group of stakeholders and the critical role they play.
- Measure success in years and decades and prioritize long-term decision-making.
- Align executive compensation and board compensation with long-term performance.
- Boards of directors should have explicit oversight of long-term strategy.
- Engage with long-term shareholders.
Eric Ries, LTSE founder and CEO, said in a blog post the concept came from conversations with long-term institutional investors, corporate executives, managers, workers and others.
"They described the immense pressure on companies to pursue short-term results over creating value for future decades and generations. They described innovation held hostage by boom-bust cycles, abrupt changes in governance, struggles to maintain constancy of purpose, and the difficulty for public companies in knowing who their long-term shareholders even are. One of the few things that pretty much everyone agreed on is that the focus on the short term undermines the building of sustainable businesses," Mr. Ries said in the post.
Members of the LTSE Coalition supporting the exchange for public and private investment represent asset owners and asset managers with a combined $7 trillion in assets under management.