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> fiduciary duty to maximize the share price This is simply not true. They have duties to the shareholders and the best interests of the company, which is not
by googlryas 3y ago
> fiduciary duty to maximize the share price
This is simply not true. They have duties to the shareholders and the best interests of the company, which is not the same thing as maximizing the share price.
- Fripplebubby 3y agoGood point, I was oversimplifying. A strong CEO can make the case that doing X or Y, while it may not maximize the share price directly, is the right thing to do for other reasons. Iger is actually such a "strong" CEO, but he has to pick his battles and where to expend social capital too.
- sophacles 3y agoIt's sort of true. Like "no one got fired for buying IBM", no CEO gets fired for "raising share value". It's hard to argue that moves that raise the revenue and share price for a company are not in the best interest of the company and/or shareholders. Particularly when it's in a way that trades potential future value for realized value right now... the costs only get revealed in hindsight long after accountability for the CEO is possible.
- MichaelZuo 3y agoThis is isn't a reliable strategy, since even if 9 out of 10 out times the judges agree and toss out the case, all it takes is for that one time they disagree.