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while increased wages were fine, Ford also attempted selling automobiles at a loss to the company in order to proliferate the number of Ford's on the road. For
by will_brown 10y ago
while increased wages were fine, Ford also attempted selling automobiles at a loss to the company in order to proliferate the number of Ford's on the road. Ford was sued by his shareholder's, Ford lost having been in breach of his duty to the shareholders.
Specifically, "the Michigan Supreme Court held that Henry Ford had to operate the Ford Motor Company in the interests of its shareholders, rather than in a charitable manner for the benefit of his employees or customers."
- coredog64 10y agoLet us not muddy the waters with "Dodge vs. Ford" nonsense. Not only was a fair chunk of the original decision reversed on appeal, but it's also fairly well known in business law that "Dodge vs. Ford" is an aberration and not solid precedent.
- will_brown 10y agoThe law has certainly evolved over time into the business judgment rule...but that only muddys the waters more than the maximization rule from dodge v ford. We see new types of cases from shareholders against boards/officers all the time, including, but not limited to political donations; increasing corporate expensive for more environmentally friendly supply chains; and similar issues of selling product for loss. These shareholders would likely win all the time under dodge v ford, but now they win some and lose some under business judgment rule based on the taste of the jurisdiction/jury. The reality is case law provides only some clues and the waters are muddy until a given set of facts is tested, and I'm not saying I like the shareholder maximization rule over business judgment but I do prefer bright line rules over balancing acts.
- deleted 10y ago[deleted]