[lesuorac]

Why are they different shareholders?

Trivially, the company can expect that it's current shareholders will hold the stock for a long time and so there's no reason to "juice" the current price at the cost of future price.

But also simply, making long term plans is easily arguable to be in fiduciary duty as a future shareholder would be willing to pay more to the current shareholder for a company in good health.

[fluoridation]

>Why are they different shareholders?

My question is about those cases when they're different.

>But also simply, making long term plans is easily arguable to be in fiduciary duty as a future shareholder would be willing to pay more to the current shareholder for a company in good health.

The future is uncertain. The future company may be in worse health even with this forward-thinking decision, for any number of reasons. One in the bag is worth two in the bush and all that. So as long as we consider fiduciary duty a valid priority, how can we argue against immediate extraction of value over all other concerns?

[mattkrause]

The timeline (short vs. long ) doesn't matter at all.

The current shareholders have chosen the management (e.g., by voting for the Board) and are consequently agreeing to follow their plan. If you don't like that plan, you have other remedies: sell your stock, run for a seat on the board, etc.

As you note, the future is uncertain, so courts don't want to be in the business of second-guessing facts and competencies.

[fluoridation]

>If you don't like that plan, you have other remedies: sell your stock, run for a seat on the board, etc.

That exact same argument could be used to dismiss the concept of fiduciary duty altogether. "If the company doesn't operate in a matter you like just divest your stock."

[mattkrause]

The company doesn't exactly have a fiduciary duty to you. It (or more specifically, its agents) have one to the company itself. This can be broken in cases of fraud, illegality, or conflict of interest. For example, in Caremark and Trans Union, the directors were so checked out that they should have known better--you can't sell a company for a random value picked out of a hat.

Beyond that though, the business judgement rule is supposed to protect against second-guessing plausible decisions.