4 ms·

Would be against the law right? You are required to maximize stockholder value

vel0city 4y ago
If the majority of Facebook's shareholders wanted to liquidate the company and blow the proceeds hosting the biggest ice cream party in the world the executives are supposed to make that happen. It's not about producing profits it's about doing what the shareholders want.
prottog 4y ago
> You are required to maximize stockholder value This is legal fiction that has no bearing in the kinds of subjects that it often gets brought up in. Simply put, those responsible for a company (e.g. officers of a corporation) have a fiduciary duty towards its owners (e.g. the shareholders), and it means that the owners would have legal recourse against the officers if they were provably pissing money away on things that don't benefit the company at all. That latter part is a high bar and critically does not mean that they are, for example, legally required to prioritize quarterly profits over the long-term success of the company or to pay employees as little as possible, as is often mentioned. It just means that officers must take action that furthers the interests of the company in the way that they prudently and reasonably see fit.
- colinmhayes 4y ago
  > legally required to prioritize quarterly profits over the long-term success of the company or to pay employees as little as possible, as is often mentioned. Obviously this isn't a legal requirement, but pretty much every CEO would be out of a job if they choose country over company. Shareholders are generally not interested in furthering national geopolitics.
  - lazyasciiart 4y ago
    > Shareholders are generally not interested in furthering national geopolitics. I don't think that's true. Look at all the corporate action about Ukraine for an example of interest in geopolitics - lots of donations, public statements, etc. And then there's companies actually in Ukraine, or next door - when politics gets unstable enough, contributing to the stability/security of the country over the short term of the company looks like the right move. Evaluating when that point is reached is probably about as contentious as any other decision in politics.
danaris 4y ago
This is a popular deflection of responsibility that is, in fact, entirely false. You are required to abide by shareholder decisions at official meetings, and generally not act against shareholder interests, but there is absolutely no law stating that you must act to maximize shareholder value. (And it's a damn good thing that's the case; things are bad enough as it is.)
gausswho 4y ago
How does this fictional canard stop being posted to HN?
- Firmwarrior 4y ago
  I think it's good if it gets posted and debunked as often as possible to maximize the knowledge that it is false
colinmhayes 4y ago
You're required to put forth a good faith effort to act in the shareholders interests, but no court would say choosing country over company breaks that law. The CEO would certainly be fired though, so it still won't happen.

If the majority of Facebook's shareholders wanted to liquidate the company and blow the proceeds hosting the biggest ice cream party in the world the executives are supposed to make that happen. It's not about producing profits it's about doing what the shareholders want.

prottog 4y ago

> You are required to maximize stockholder value This is legal fiction that has no bearing in the kinds of subjects that it often gets brought up in. Simply put, those responsible for a company (e.g. officers of a corporation) have a fiduciary duty towards its owners (e.g. the shareholders), and it means that the owners would have legal recourse against the officers if they were provably pissing money away on things that don't benefit the company at all. That latter part is a high bar and critically does not mean that they are, for example, legally required to prioritize quarterly profits over the long-term success of the company or to pay employees as little as possible, as is often mentioned. It just means that officers must take action that furthers the interests of the company in the way that they prudently and reasonably see fit.

colinmhayes 4y ago
> legally required to prioritize quarterly profits over the long-term success of the company or to pay employees as little as possible, as is often mentioned. Obviously this isn't a legal requirement, but pretty much every CEO would be out of a job if they choose country over company. Shareholders are generally not interested in furthering national geopolitics.
- lazyasciiart 4y ago
  > Shareholders are generally not interested in furthering national geopolitics. I don't think that's true. Look at all the corporate action about Ukraine for an example of interest in geopolitics - lots of donations, public statements, etc. And then there's companies actually in Ukraine, or next door - when politics gets unstable enough, contributing to the stability/security of the country over the short term of the company looks like the right move. Evaluating when that point is reached is probably about as contentious as any other decision in politics.

danaris 4y ago

This is a popular deflection of responsibility that is, in fact, entirely false. You are required to abide by shareholder decisions at official meetings, and generally not act against shareholder interests, but there is absolutely no law stating that you must act to maximize shareholder value. (And it's a damn good thing that's the case; things are bad enough as it is.)

gausswho 4y ago

How does this fictional canard stop being posted to HN?

Firmwarrior 4y ago
I think it's good if it gets posted and debunked as often as possible to maximize the knowledge that it is false

colinmhayes 4y ago

You're required to put forth a good faith effort to act in the shareholders interests, but no court would say choosing country over company breaks that law. The CEO would certainly be fired though, so it still won't happen.