3 ms·

Amazon is a publicly traded company. As CEO, even though he has a lot of sway, Bezos has a responsibility to maximize shareholder value. Half of that is maxim

Amazon is a publicly traded company. As CEO, even though he has a lot of sway, Bezos has a responsibility to maximize shareholder value. Half of that is maximizing profits. Half is controlling costs.

melling 8y ago
That old myth: http://www.latimes.com/business/hiltzik/la-fi-warren-shareholder-myth-20180816-story.html http://www.latimes.com/business/hiltzik/la-fi-warren-shareho...
- slededit 8y ago
  Not the best article - if it’s a myth why does Senator Warren need to introduce new legislation?
  - neltnerb 8y ago
    Because it looks good, and companies need some pressure to adopt new practices that go against their institutional assumptions, even if the new practices are better. Not sure if I agree with her about employee votes or community votes or thresholds, but they're interesting ideas to think about. Obviously it's not getting passed anytime soon, so I read it as a starting point for a conversation. I think both make logical sense, thinking of it as required unionization and an adjustment to require companies that have more power than towns take those towns into account somehow. Definitely an approach to think about. Occasionally, industries will ask as a group to be regulated because it's too hard or risky to take a step on their own, even if they all agree it's a good idea. Salt would be an example where the big companies all generally agree they can easily reduce it without anyone noticing if they all do it at the same time, but if only one does it they'll taste noticeably worse. So the only way they can figure to start reducing salt is by getting a regulation written to make it happen. It's a curious system.
    - slededit 8y ago
      I’m actually interested in proof it is a myth - but this article is not it. It’s an ad for Senator Warrens re-election campaign
  - sokoloff 8y ago
    Because she intends to run for President in 2020 and is interested in making a very public grand gesture that will fail to pass in the legislature.
- Godel_unicode 8y ago
  You might want to consider slightly newer precedents: https://onlinelibrary.wiley.com/doi/pdf/10.1111/basr.12108 https://onlinelibrary.wiley.com/doi/pdf/10.1111/basr.12108
  - detaro 8y ago
    That reads more like "you can not too aggressively work against one of your shareholders' influence", not "you have to maximize profits at all costs", and the article claims Craigslist could have mostly preserved it's non-profit-oriented culture through means not challenged by the court. To me, the article more supports than denies the stance of "it's a myth that companies can't improve their workers situation because that would breach their responsibility to shareholders". The responsibility to shareholders exist, but it's not as absolute as argued. Some quotes: > First, the business judgment rule provides broad protection for managers and directors when they make decisions that benefit customers, employees, suppliers, the community, and other non-shareholder interests, as long as these actions are reasonably believed in good faith to promise some shareholder benefit. Enabling corporate social responsibility is not the purpose of the business judgment rule; it is, rather, to avoid the courts’ second-guessing of reasonable decisions by officers and directors. However, it serves, albeit unintentionally, to enable corporations to act responsibly without risking legal challenges from shareholders. > In any event, the elements of the plan that were struck down by the Delaware court were aimed at question- able objectives, which need not have been attained to preserve the Craigslist culture and way of doing business, at least in the short run.
davesque 8y ago
If that sentiment is the main obstacle standing in the way of economic justice, then perhaps it should be done away with?
eagsalazar2 8y ago
He does not have that responsibility at all. Fiduciary duty in the sense you describe it is a myth and a very dangerous and damaging myth that absolves CEOs of all kinds of bad behavior. I would agree that he risks decrease in his stock value if it is perceived that isn't a single-minded ruthless capitalist but that still doesn't absolve CEOs of moral responsibility in these matters. Having said all that I still agree with his approach. I'm not a big fan of artificially distorting the market (vs providing better social/community services which I am a fan of)
- Godel_unicode 8y ago
  That duty is very real. https://onlinelibrary.wiley.com/doi/pdf/10.1111/basr.12108 https://onlinelibrary.wiley.com/doi/pdf/10.1111/basr.12108
- Zarath 8y ago
  > distorting the market the realities of the labor "market" are far from a perfect market, mostly because of the massive leverage imbalances between employer and employee (e.g. it's a lot easier for amazon to replace a singular employee than for that employee to find another job). You're not distorting the market by leveling the playing field, in fact it may be you are un-distorting it.
ohyes 8y ago
You can make an argument that a workforce which can’t afford proper housing, healthcare or food is less effective (and therefore more expensive) than one that is paid more and has a decent standard of living. You can also argue that a company being a good corporate citizen adds intangible value to itself by way of excellent reputation. You can see this happening with Amazon because they’ve done so much evil good engineers no longer want to work with them. This is directly related to their shitty shortsighted policies.

Amazon is a publicly traded company. As CEO, even though he has a lot of sway, Bezos has a responsibility to maximize shareholder value. Half of that is maximizing profits. Half is controlling costs.

melling 8y ago

That old myth: http://www.latimes.com/business/hiltzik/la-fi-warren-shareholder-myth-20180816-story.html http://www.latimes.com/business/hiltzik/la-fi-warren-shareho...

slededit 8y ago
Not the best article - if it’s a myth why does Senator Warren need to introduce new legislation?
- neltnerb 8y ago
  Because it looks good, and companies need some pressure to adopt new practices that go against their institutional assumptions, even if the new practices are better. Not sure if I agree with her about employee votes or community votes or thresholds, but they're interesting ideas to think about. Obviously it's not getting passed anytime soon, so I read it as a starting point for a conversation. I think both make logical sense, thinking of it as required unionization and an adjustment to require companies that have more power than towns take those towns into account somehow. Definitely an approach to think about. Occasionally, industries will ask as a group to be regulated because it's too hard or risky to take a step on their own, even if they all agree it's a good idea. Salt would be an example where the big companies all generally agree they can easily reduce it without anyone noticing if they all do it at the same time, but if only one does it they'll taste noticeably worse. So the only way they can figure to start reducing salt is by getting a regulation written to make it happen. It's a curious system.
  - slededit 8y ago
    I’m actually interested in proof it is a myth - but this article is not it. It’s an ad for Senator Warrens re-election campaign
- sokoloff 8y ago
  Because she intends to run for President in 2020 and is interested in making a very public grand gesture that will fail to pass in the legislature.
Godel_unicode 8y ago
You might want to consider slightly newer precedents: https://onlinelibrary.wiley.com/doi/pdf/10.1111/basr.12108 https://onlinelibrary.wiley.com/doi/pdf/10.1111/basr.12108
- detaro 8y ago
  That reads more like "you can not too aggressively work against one of your shareholders' influence", not "you have to maximize profits at all costs", and the article claims Craigslist could have mostly preserved it's non-profit-oriented culture through means not challenged by the court. To me, the article more supports than denies the stance of "it's a myth that companies can't improve their workers situation because that would breach their responsibility to shareholders". The responsibility to shareholders exist, but it's not as absolute as argued. Some quotes: > First, the business judgment rule provides broad protection for managers and directors when they make decisions that benefit customers, employees, suppliers, the community, and other non-shareholder interests, as long as these actions are reasonably believed in good faith to promise some shareholder benefit. Enabling corporate social responsibility is not the purpose of the business judgment rule; it is, rather, to avoid the courts’ second-guessing of reasonable decisions by officers and directors. However, it serves, albeit unintentionally, to enable corporations to act responsibly without risking legal challenges from shareholders. > In any event, the elements of the plan that were struck down by the Delaware court were aimed at question- able objectives, which need not have been attained to preserve the Craigslist culture and way of doing business, at least in the short run.

davesque 8y ago

If that sentiment is the main obstacle standing in the way of economic justice, then perhaps it should be done away with?

eagsalazar2 8y ago

He does not have that responsibility at all. Fiduciary duty in the sense you describe it is a myth and a very dangerous and damaging myth that absolves CEOs of all kinds of bad behavior. I would agree that he risks decrease in his stock value if it is perceived that isn't a single-minded ruthless capitalist but that still doesn't absolve CEOs of moral responsibility in these matters. Having said all that I still agree with his approach. I'm not a big fan of artificially distorting the market (vs providing better social/community services which I am a fan of)

Godel_unicode 8y ago
That duty is very real. https://onlinelibrary.wiley.com/doi/pdf/10.1111/basr.12108 https://onlinelibrary.wiley.com/doi/pdf/10.1111/basr.12108
Zarath 8y ago
> distorting the market the realities of the labor "market" are far from a perfect market, mostly because of the massive leverage imbalances between employer and employee (e.g. it's a lot easier for amazon to replace a singular employee than for that employee to find another job). You're not distorting the market by leveling the playing field, in fact it may be you are un-distorting it.

ohyes 8y ago

You can make an argument that a workforce which can’t afford proper housing, healthcare or food is less effective (and therefore more expensive) than one that is paid more and has a decent standard of living. You can also argue that a company being a good corporate citizen adds intangible value to itself by way of excellent reputation. You can see this happening with Amazon because they’ve done so much evil good engineers no longer want to work with them. This is directly related to their shitty shortsighted policies.