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When people bring up "fiduciary duty" in either a taxes or outsourcing context (i.e. it's Apple's fiduciary duty to build its products in China), I always ask f

When people bring up "fiduciary duty" in either a taxes or outsourcing context (i.e. it's Apple's fiduciary duty to build its products in China), I always ask for a pointer to a successful lawsuit in which this particular fiduciary duty was enforced. Yes, in theory it's their fiduciary duty to minimize taxes, but I've never heard of a board being sued because they didn't squeeze every last dollar out of their tax bill.

kbenson 10y ago
First link in the quick Google search I did, which starts with a story where Henry Ford wanted to stop paying special dividends to partial owners. "At trial, Ford testified to his belief that the company made too much money and had an obligation to benefit the public and the firm’s workers and customers." The judge did no agree. I haven't read the whole article yet, but it seems definitely to apply (and also notes there is little precedent in this area). 1: http://www.professorbainbridge.com/professorbainbridgecom/2012/05/case-law-on-the-fiduciary-duty-of-directors-to-maximize-the-wealth-of-corporate-shareholders.html http://www.professorbainbridge.com/professorbainbridgecom/20...
- rhizome 10y ago
  I'd say a 100 year old case speaks to a lack of enforcement of fiduciary duty in the courts.
  - Phlarp 10y ago
    On the other hand, "Henry Ford got smacked for it" speaks loud enough to stop most executives and their corporate lawyers from testing the waters. Even if some time has passed.
  - ryanlol 10y ago
    http://www.delawarelitigation.com/uploads/file/int51%281%29.pdf http://www.delawarelitigation.com/uploads/file/int51%281%29....
    - drumdance 10y ago
      That's just an example of fiduciary duty, not one relevant to taxes or outsourcing, which I mentioned in my original comment. Again, has anyone every sued a company to demand that they try harder to lower their tax bill or move operations overseas? Some companies even brag about NOT outsourcing. Socially conscious marketing.
      - ryanlol 10y ago
        >not one relevant to taxes or outsourcing, which I mentioned in my original comment. Perhaps this is related to the fact that I wasn't responding to your comment? >Some companies even brag about NOT outsourcing. Socially conscious marketing. And?
        rhizome 10y ago
        I think their point is: does refraining from outsourcing expose a company's leadership to fiduciary duty risk?
        ryanlol 10y ago
        If such a decision is overwhelmingly likely a bad choice, most likely yes. However, obviously there's always potential risks and costs involved in outsourcing that need to be taken into account when evaluating such decisions. This would also presumably require that the leadership be informed of the obviously better course of action.
- drumdance 10y ago
  The dispute was about dividends. No mention of taxes or outsourcing.
yongjik 10y ago
(Semi off-topic) Maybe not what you want, but in 2008, the CEO of KBS, South Korea's public broadcasting corporation, was fired by the government for having agreed to court settlement in dispute with National Tax Service over how much tax KBS should pay. Yes, he was fired because he had followed the settlement suggested by the freaking court. (The real reason was that he was a liberal appointed by the previous president Roh, and the new government led by conservative Lee Myung-Bak wanted him gone.) Years later the court ruled that the firing was unlawful (duh), but somehow he wasn't reinstated, and anyways, the damage was done.

kbenson 10y ago

First link in the quick Google search I did, which starts with a story where Henry Ford wanted to stop paying special dividends to partial owners. "At trial, Ford testified to his belief that the company made too much money and had an obligation to benefit the public and the firm’s workers and customers." The judge did no agree. I haven't read the whole article yet, but it seems definitely to apply (and also notes there is little precedent in this area). 1: http://www.professorbainbridge.com/professorbainbridgecom/2012/05/case-law-on-the-fiduciary-duty-of-directors-to-maximize-the-wealth-of-corporate-shareholders.html http://www.professorbainbridge.com/professorbainbridgecom/20...

rhizome 10y ago
I'd say a 100 year old case speaks to a lack of enforcement of fiduciary duty in the courts.
- Phlarp 10y ago
  On the other hand, "Henry Ford got smacked for it" speaks loud enough to stop most executives and their corporate lawyers from testing the waters. Even if some time has passed.
- ryanlol 10y ago
  http://www.delawarelitigation.com/uploads/file/int51%281%29.pdf http://www.delawarelitigation.com/uploads/file/int51%281%29....
  - drumdance 10y ago
    That's just an example of fiduciary duty, not one relevant to taxes or outsourcing, which I mentioned in my original comment. Again, has anyone every sued a company to demand that they try harder to lower their tax bill or move operations overseas? Some companies even brag about NOT outsourcing. Socially conscious marketing.
    - ryanlol 10y ago
      >not one relevant to taxes or outsourcing, which I mentioned in my original comment. Perhaps this is related to the fact that I wasn't responding to your comment? >Some companies even brag about NOT outsourcing. Socially conscious marketing. And?
      - rhizome 10y ago
        I think their point is: does refraining from outsourcing expose a company's leadership to fiduciary duty risk?
        ryanlol 10y ago
        If such a decision is overwhelmingly likely a bad choice, most likely yes. However, obviously there's always potential risks and costs involved in outsourcing that need to be taken into account when evaluating such decisions. This would also presumably require that the leadership be informed of the obviously better course of action.
drumdance 10y ago
The dispute was about dividends. No mention of taxes or outsourcing.

yongjik 10y ago

(Semi off-topic) Maybe not what you want, but in 2008, the CEO of KBS, South Korea's public broadcasting corporation, was fired by the government for having agreed to court settlement in dispute with National Tax Service over how much tax KBS should pay. Yes, he was fired because he had followed the settlement suggested by the freaking court. (The real reason was that he was a liberal appointed by the previous president Roh, and the new government led by conservative Lee Myung-Bak wanted him gone.) Years later the court ruled that the firing was unlawful (duh), but somehow he wasn't reinstated, and anyways, the damage was done.