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Achieve profit is not the same thing as provide value or best interest of. It could be. It does not have to be.

tsimionescu 4y ago
A for-profit company is there for profit. There is no other way to interpret shareholder value in a for-profit company, for purposes of discussing fiduciary duty. Now, providing profit/share-holder value need not mean maximizing said profit - it just means that profit must always be considered in any business decision, it can never be entirely ignored in favor of other things. Note that not even shareholders get to decide what kind of value they expect their board to offer them. That definition of value is set in stone by the type of corporation. The board of a for-profit company has a fiduciary duty to the shareholders of the company as pertains to profits. If 100% of the shareholders of Twitter voted to ask the board to sacrifice profit for free speech; and the board decided to ignore this request entirely and publicly announced they would limit free speech at every trun to focus on profits, the shareholders would have no chance of winning a breach of fiduciary duty trial against the board. The board has no legal duty to uphold some abstract values that shareholders hold dear, they only have a legal duty to act in the interest of company profit as they see fit.
- PaulDavisThe1st 4y ago
  > it just means that profit must always be considered in any business decision, it can never be entirely ignored in favor of other things. The word "entirely" is doing a lot of work there. > The board of a for-profit company has a fiduciary duty to the shareholders of the company as pertains to profits. This is a dramatic oversimplification that borders on falsehood, as you noted yourself in your previous paragraph. As a trivial example, the board would be entirely entitled to claim that their goal is very long term profit maximization, and that this will result in decades of losses (effectively Amazon's strategy). We also now have "Public Benefit Corporation" as a codification of a for-profit corporation that does not have profit as its primary motivation (at least in 35 states & DC), but obviously that does not apply in the case of Twitter.
  - tsimionescu 4y ago
    > As a trivial example, the board would be entirely entitled to claim that their goal is very long term profit maximization, and that this will result in decades of losses (effectively Amazon's strategy). Yes, but that's still a profit based motivation. My point was that the board of a for-profit company doesn't have a fiduciary duty to represent non-financial interests of the company or shareholders. That is, you can't sue the board of a for-profit company because they didn't uphold their fiduciary duty to represent your interest of having a free-speech platform, even if you had made it very clear that to you this is much more important than profits, and even if you owned 100% of shares [well, you can sue, but the case will be quickly thrown out] Conversely, the board can always claim that they made free speech a priority because they believe that will help drive long term profits, even if shareholders asked them to focus on profits to the detriment of free speech, and even if profits immediately tanked after this decision; and they will likely win in a trial.
    - LocalPCGuy 4y ago
      I'm not a corporate lawyer, and by no means an expert, but I think this is propagating one of the great myths of the last 40 years or so. Profits/finances are not the sole-arbiter of success, even in for-profit companies. A fiduciary duty is not simply to profits, but to the success of the company (however it and the shareholders measure it). Granted, they likely need money to continue with whatever is their measure of success. There will always be those that feel that the sole duty of a company is to profit, but that doesn't mean they are correct.
      - tsimionescu 4y ago
        Ok, try to find a breach of fiduciary duty trial that didn't involve profits (discussing a for-profit company, not a public benefit company or other organization). The famous Dodge v Ford was about Ford increasing employee wages and reducing prices, at the cost of profits. One of his main motivations was to avoid paying out dividends to the Dodge brothers, who were using said dividends to bootstrap their own car company. The trial found that Ford has ample leeway in running the company as he sees fit, but can't simply ignore profit completely or do things with the sole purpose of avoiding profit.

A for-profit company is there for profit. There is no other way to interpret shareholder value in a for-profit company, for purposes of discussing fiduciary duty. Now, providing profit/share-holder value need not mean maximizing said profit - it just means that profit must always be considered in any business decision, it can never be entirely ignored in favor of other things. Note that not even shareholders get to decide what kind of value they expect their board to offer them. That definition of value is set in stone by the type of corporation. The board of a for-profit company has a fiduciary duty to the shareholders of the company as pertains to profits. If 100% of the shareholders of Twitter voted to ask the board to sacrifice profit for free speech; and the board decided to ignore this request entirely and publicly announced they would limit free speech at every trun to focus on profits, the shareholders would have no chance of winning a breach of fiduciary duty trial against the board. The board has no legal duty to uphold some abstract values that shareholders hold dear, they only have a legal duty to act in the interest of company profit as they see fit.

PaulDavisThe1st 4y ago
> it just means that profit must always be considered in any business decision, it can never be entirely ignored in favor of other things. The word "entirely" is doing a lot of work there. > The board of a for-profit company has a fiduciary duty to the shareholders of the company as pertains to profits. This is a dramatic oversimplification that borders on falsehood, as you noted yourself in your previous paragraph. As a trivial example, the board would be entirely entitled to claim that their goal is very long term profit maximization, and that this will result in decades of losses (effectively Amazon's strategy). We also now have "Public Benefit Corporation" as a codification of a for-profit corporation that does not have profit as its primary motivation (at least in 35 states & DC), but obviously that does not apply in the case of Twitter.
- tsimionescu 4y ago
  > As a trivial example, the board would be entirely entitled to claim that their goal is very long term profit maximization, and that this will result in decades of losses (effectively Amazon's strategy). Yes, but that's still a profit based motivation. My point was that the board of a for-profit company doesn't have a fiduciary duty to represent non-financial interests of the company or shareholders. That is, you can't sue the board of a for-profit company because they didn't uphold their fiduciary duty to represent your interest of having a free-speech platform, even if you had made it very clear that to you this is much more important than profits, and even if you owned 100% of shares [well, you can sue, but the case will be quickly thrown out] Conversely, the board can always claim that they made free speech a priority because they believe that will help drive long term profits, even if shareholders asked them to focus on profits to the detriment of free speech, and even if profits immediately tanked after this decision; and they will likely win in a trial.
  - LocalPCGuy 4y ago
    I'm not a corporate lawyer, and by no means an expert, but I think this is propagating one of the great myths of the last 40 years or so. Profits/finances are not the sole-arbiter of success, even in for-profit companies. A fiduciary duty is not simply to profits, but to the success of the company (however it and the shareholders measure it). Granted, they likely need money to continue with whatever is their measure of success. There will always be those that feel that the sole duty of a company is to profit, but that doesn't mean they are correct.
    - tsimionescu 4y ago
      Ok, try to find a breach of fiduciary duty trial that didn't involve profits (discussing a for-profit company, not a public benefit company or other organization). The famous Dodge v Ford was about Ford increasing employee wages and reducing prices, at the cost of profits. One of his main motivations was to avoid paying out dividends to the Dodge brothers, who were using said dividends to bootstrap their own car company. The trial found that Ford has ample leeway in running the company as he sees fit, but can't simply ignore profit completely or do things with the sole purpose of avoiding profit.