3 ms·
When you become a director of a company you have a legal duty to "enhance shareholder value" thats the only rule. Anything else you do, every hire, every contr
by lokiujhytyu 16y ago
When you become a director of a company you have a legal duty to "enhance shareholder value" thats the only rule.
Anything else you do, every hire, every contract, every charity donation must be justifiable in this context - unless you enjoy shareholder lawsuits.
- Kadin 16y agoThis is false. You have a duty to do what the shareholders want you to do and what is in their best interest, but you are allowed to use your own judgement to a great extent to determine what that might be. There is a great deal of caselaw dealing with this (you can google "shareholder primacy" if you want to jump in) but it is anything but clear cut. If the duty of directors to shareholders was as absolute as many people on the Internet think it is, companies would have to shut down and go into liquidation every time their market cap dropped below book value. But they don't (even, in some cases, when some investors might prefer it) because directors have the prerogative to seek long term gains at the expense of short term ones. (They also have the prerogative to do the opposite, and the market unfortunately tends to reward it, but there are many exceptions.)
- yardie 16y agoCan you point this out in a legal brief, law book, SEC ruling? something? I believe the only thing legal you are required to do is not to defraud your shareholders. Any idiot can, legally, run a company into the ground.
- gaius 16y agoThe phrase you are looking for is "fiduciary responsibility". You can just Google it: http://www.efmoody.com/arbitration/fiduciary.html http://www.efmoody.com/arbitration/fiduciary.html