| I'm just trying to illustrate what happens when you have an agent-principal relationship, which is the situation that public corporations are in. Now, perhaps my boss and I have an agreement such that if I see a suitably sympathetic looking homeless person, I can alter the coffee mission and give them the money instead. But the the number of potential situations that could arise exceeds the number of prior agreements we could conceivably have, and ultimately in the face of uncertainty my default position has to be 'do what the boss said'. The scenario was between me and my boss, but the analogy is for the relationship between the board of directors and the shareholders. It's not practical for the (millions of) shareholders to communicate their specific desires in every potential circumstance to the board. The board's default mission is 'enhance shareholder wealth'. Thus _on average_ the board's decisions will probably be less charitable than those of any individual board member or individual shareholder if they weren't acting on someone else's behalf. See the Milgram experiment, for example. The reality is that for most shareholders, the company is just an anonymous component of their retirement fund, and all they want is for it to go up. Super funds generally don't even tell you what companies you're invested in. So the average shareholder does not want the board of directors they've never met of a company they don't even know they own to decide without consultation to give THEIR retirement money to a (figurative) homeless person who the board decided was more worthy of the shareholder's money than the shareholder. They just want their retirement fund to grow, and this is what the boards of these companies have been tasked with: if the shareholders want to be charitable, they can do that on their own. Enhancing shareholder wealth doesn't have to be zero-sum: in a free market, transactions should be beneficial to both parties. You give customers something they want, and customers pay you for it. Everybody wins. It's up to regulators to set rules such that legal methods of enhancing shareholder wealth don't include exploitation. |