> If you buy into the idea that a corporation is there for its shareholders
It's not an idea, it's a literal legal duty.
It's not an idea, it's a literal legal duty.
That cartoon has resonated over the years because it illustrates a point that complexifies the whole shareholder-value concept: you can recognize that a corporation's fiduciary duty is to its shareholders, but you still have a long term / short term thinking problem. If a corporation is just shoveling its profits at shareholders without consideration for the future, or, in the cartoon example, destroying the planet, is it really providing them the best value?
There is no universal definition of shareholder value, legally or otherwise. I'm a shareholder in many companies, and to me they should deliver me profits when it makes sense, take care of their employees, not harm the environment, not overspend, not cut corners on health or safety... it's a long list, really.
I also found it at the New Yorker: https://www.newyorker.com/cartoon/a16995
I am unsure of the original source.
[1] https://www.nytimes.com/roomfordebate/2015/04/16/what-are-co...
[2] https://insight.kellogg.northwestern.edu/article/shareholder...
[3] https://medium.com/bull-market/there-is-no-effective-fiducia...
> a corporation is there for its shareholders
Which is a little different from maximizing shareholder value and is kinda true. As the second link says
> a CEO or board is not legally obliged to maximize shareholder value. They need to maximize the value of the corporation and act in its best interest.
Which IMO agrees with OP. The company is there for the shareholders. The execs and directors have a ton of leeway when it comes to acting in the corporations best interest, but if an exec would be in trouble if they said "we're implementing this policy for the benefit of employees and it's going to come at the expense of the company and we have no argument for how this is good for the company". But it's not that hard to take the same policy and say "happier employees are good for the company"
It is a legal duty but there's a huge amount of leeway. You could certainly implement lots of policies that put employees on close to equal footing and argue that it's in the best interest of the company. No one would find you in breach of fiduciary duty, although the board/shareholders might disagree and remove you.
There's a legal duty to not cheat shareholders by idiotic spending, pocketing the investment money, and the like. But there was never a duty to optimize returns to shareholders.
I said that corporations exist for their shareholders. This is a legal fiduciary duty.
The history of incorporation suggests the contrary. This attitude is backed up mainly only by 1980s-onwards neo-proprietarian ideology/faith/apologia.
> This is a legal fiduciary duty.
Much like use of fiduciary in the usual sense: not screwing over your shareholders is, yes. Not choosing the plan to maximize the right outcomes ("quality attributes" other than profit exist) after the right length (short or long?) time not being the best one? No.
Shareholders usually get some vote through the board, but they are secondary to the actual incorporation documents.