5 ms·

But once a company is public, then maximising profit is really the only goal. If you don't do that as a CEO, aren't you being negligent (doing something illegal

by throw14082020 5y ago

But once a company is public, then maximising profit is really the only goal. If you don't do that as a CEO, aren't you being negligent (doing something illegal).

flyinglizard 5y ago
There are many faces to profit. Amazon didn’t turn a profit for twenty years but no one would say Jeff Bezos was negligent. It is more accurate to say that CEOs need to create value. Even then, value can be at one point (liquidate all company assets) or oriented towards the distant future (invest in nuclear fusion tech).
bruce511 5y ago
That really is a myth that needs to die.
- colinmhayes 5y ago
  No it's really not. Thinking that it means "maximising short term profit is really the only goal" is a myth that needs to die, but maximising net discounted profit is really the only goal of public companies.
  - wtetzner 5y ago
    They're obligated to act in the interest of shareholders. That usually means profits, but could very well be other things.
    - foolinaround 5y ago
      this here is the real answer. So, if a majority of Apple's shareholders feel a different way from just maximizing profits then changes could be underway.
pixelatedindex 5y ago
Is it really illegal to not maximize profit? I suppose we have capitalism to thank for that, where companies like PG&E can cut corners on maintenance and yet the C-level executives get to take home millions in bonuses. Just because it's legal doesn't mean it's the right thing to do, you know? Or perhaps I'm just naïve and everyone should be out for themselves, the community/society be damned.
- pc86 5y ago
  The "illegal" thing they're referring to is fiduciary responsibility. The board and officers of a public corporation have a duty to do what is in the best interest of the shareholders. The question then becomes what horizon is "in the best interest" of the shareholders.
  - pixelatedindex 5y ago
    What happens when the best interest of the shareholders actively harm the public or the community? I used PG&E as an example but telecom companies have accepted government grants to improve their infrastructure but they end up not doing any of it. Our government doesn’t seem to care about these things either, as PG&E continues to not face any consequences and I can’t take my business elsewhere as there are no other energy companies. I rent so I don’t have the option of going off the grid either. My parent comment got downvoted but I don’t know why - just because you disagree with me doesn’t mean it’s grounds for downvoting, as I’m only trying to facilitate a discussion. I think some regulations and enforcement is sorely lacking in these areas.
    - pc86 5y ago
      I think you'd have a hard time as a shareholder arguing in court that an executive should have broken the law in order to get you a higher return. Unrelated: "Please don't comment about the voting on comments. It never does any good, and it makes boring reading." https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
cromka 5y ago
> But once a company is public, then maximising profit is really the only goal. You may want to research the growing trend of measuring companies against their impact, sustainability, etc., as well as increasingly popular indices that track companies based on that.
- colinmhayes 5y ago
  All of these measures are just trying to instrument on long term profitability. The idea being that sustainable companies are less likely to be abandoned in the future.
  - cromka 5y ago
    The point was made as to what Apple currently maximizes for, and explained as "no matter anything else, like profit first , honesty later". This is what we're arguing about. Long term profitability that involves thinking ahead of time of what would become unsustainable is, logically, speaking not maximizing for profit NOW. Honesty (ethics in business) will become increasingly important for the next generations. The current generations, however, don't care that much just yet.

But once a company is public, then maximising profit is really the only goal. If you don't do that as a CEO, aren't you being negligent (doing something illegal).

flyinglizard 5y ago

There are many faces to profit. Amazon didn’t turn a profit for twenty years but no one would say Jeff Bezos was negligent. It is more accurate to say that CEOs need to create value. Even then, value can be at one point (liquidate all company assets) or oriented towards the distant future (invest in nuclear fusion tech).

bruce511 5y ago

That really is a myth that needs to die.

colinmhayes 5y ago
No it's really not. Thinking that it means "maximising short term profit is really the only goal" is a myth that needs to die, but maximising net discounted profit is really the only goal of public companies.
- wtetzner 5y ago
  They're obligated to act in the interest of shareholders. That usually means profits, but could very well be other things.
  - foolinaround 5y ago
    this here is the real answer. So, if a majority of Apple's shareholders feel a different way from just maximizing profits then changes could be underway.

pixelatedindex 5y ago

Is it really illegal to not maximize profit? I suppose we have capitalism to thank for that, where companies like PG&E can cut corners on maintenance and yet the C-level executives get to take home millions in bonuses. Just because it's legal doesn't mean it's the right thing to do, you know? Or perhaps I'm just naïve and everyone should be out for themselves, the community/society be damned.

pc86 5y ago
The "illegal" thing they're referring to is fiduciary responsibility. The board and officers of a public corporation have a duty to do what is in the best interest of the shareholders. The question then becomes what horizon is "in the best interest" of the shareholders.
- pixelatedindex 5y ago
  What happens when the best interest of the shareholders actively harm the public or the community? I used PG&E as an example but telecom companies have accepted government grants to improve their infrastructure but they end up not doing any of it. Our government doesn’t seem to care about these things either, as PG&E continues to not face any consequences and I can’t take my business elsewhere as there are no other energy companies. I rent so I don’t have the option of going off the grid either. My parent comment got downvoted but I don’t know why - just because you disagree with me doesn’t mean it’s grounds for downvoting, as I’m only trying to facilitate a discussion. I think some regulations and enforcement is sorely lacking in these areas.
  - pc86 5y ago
    I think you'd have a hard time as a shareholder arguing in court that an executive should have broken the law in order to get you a higher return. Unrelated: "Please don't comment about the voting on comments. It never does any good, and it makes boring reading." https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html

cromka 5y ago

> But once a company is public, then maximising profit is really the only goal. You may want to research the growing trend of measuring companies against their impact, sustainability, etc., as well as increasingly popular indices that track companies based on that.

colinmhayes 5y ago
All of these measures are just trying to instrument on long term profitability. The idea being that sustainable companies are less likely to be abandoned in the future.
- cromka 5y ago
  The point was made as to what Apple currently maximizes for, and explained as "no matter anything else, like profit first , honesty later". This is what we're arguing about. Long term profitability that involves thinking ahead of time of what would become unsustainable is, logically, speaking not maximizing for profit NOW. Honesty (ethics in business) will become increasingly important for the next generations. The current generations, however, don't care that much just yet.