[krunck]

"...Google execs all work for their shareholders, in a psychotic "market system" in which the myth of "fiduciary duty" is said to require companies to hurt us right up to the point where the harms they inflict on the world cost them more than the additional profits those harms deliver"

Nailed it.

[tptacek]

Not really. The idea that "fiduciary duty" requires companies to maximize shareholder value is a pernicious Internet myth.

[topaz0]

That myth long predates the internet version of it I think. Pernicious, yes.

But note that the quote does call it out as a myth.

[tptacek]

Fiduciary duty isn't a myth! It just doesn't mean what people claim it means.

[fsflover]

Will you enlighten us?

[kasey_junk]

There is no legal requirement to maximize shareholder value. The very idea is an economic theory popularized by Friedman and his students.

It gained popularity in corporate governance since then but it’s not a legal requirement it’s a shareholder preference. But that preference is violated all the time.

People often cite a 1919 era case from Henry ford because it has a pithy statement but the court in that case explicitly upheld many of the decisions Ford made that violated the principle.

That is, there is no law or precedent that requires corporate officers to only consider shareholders.

[ethbr1]

I was under the impression the application was more akin to 'fiduciary duty provides an executive shield for morally reprehensible corporate choices' rather than 'it provides an ability to sue someone for not following it.'

Legal defense instead of offense. IANAL, correct me please.

[forgotTheLast]

It depends on your legal jurisdiction but it means COs need to act in the corporation's best interest and not their own. In some places, that requires them to take shareholders' interests into account (especially for mergers or takeovers) but also the employees, consumers or creditors. In the US and notably Delaware, courts generally value shareholder value over anything else.

Considering the vast majority of US corporations are incorporated in Delaware, I think it's accurate to say most US companies only aim to maximize shareholder value.

[tptacek]

No, Delaware does not in fact require corporations to "maximize shareholder value". That simply isn't a real thing.

"Fiduciary duty" is a duty to operate in good faith, without self-dealing, in whatever (1) you believe to be (2) the best interests of the company. Both (1) and (2) are totally subjective. You can believe the best interests of your company reside with employee welfare, or with customer satisfaction. You will not find a Delaware case that says otherwise.

So far as I know, the only time the actual value of a company's equity comes into the picture is if there are multiple competing offers to acquire the company.

[mindslight]

Legally, sure. (there's a citation, a case between craigslist and a minority shareholder (ebay I think?), that backs up your argument about the common trope).

But when stock valuations are completely disconnected from fundamentals like earnings, then regardless of the legality we're kind of circling back to the market pushing that dynamic, aren't we? It's like the market is no longer even optimizing for short term gains per se (eg quarterly earnings), but rather for whatever memes might boost their meme stock. Sometimes this is [still] quarterly earnings, and sometimes it's about the perceived size of the market or how they're cozying up to the fascists in power. So for public companies, it's not like major shareholders, the board, or management really have the ability to work towards longer term plans that go against this dynamic.

[fsflover]

And yet this is exactly how every single megacorp works.

[text0404]

Citation needed because all evidence to the contrary.