Edit: A summary quote for those not wanting to read the rather lengthy and thorough essay:
"Instead of recognizing that for-profit corporations will seek profit for their stockholders using all legal means available, we imbue these corporations with a personality and assume they are moral beings capable of being “better” in the long-run than the lowest common denominator. We act as if entities in which only capital has a vote will somehow be able to deny the stockholders their desires, when a choice has to be made between profit for those who control the board’s reelection prospects and positive outcomes for the employees and communities who do not."
https://www.wakeforestlawreview.com/2012/04/our-continuing-s...
What you’ll actually find is that executives are expected to act with the best interests of the company in mind but are given broad discretion for what that means. This is because there’s no way to reliably predict the future and any non-trivial business decision requires a gamble on multiple conditions and the outcome is hard to judge over a non-trivial timeframe. You can replace an executive if you’re unhappy, but there’s no way you’re getting any money back unless you can show something like fraud or gross nepotism.
As a simple example, during the 90s and early 2000s some analysts said Apple should switch to Windows or license macOS to PC manufacturers. At the time, they had a fair argument that this would boost profits and if your fictitious law really existed, Jobs might not have been able to ignore them – and shareholders would have missed out on many billions in value which was created later. If you measured his performance over a single year, you’d have been disastrously wrong over a decade.
"By so stating, I do not mean to imply that the corporate law requires directors to maximize short-term profits for stockholders. Rather, I simply indicate that the corporate law requires directors, as a matter of their duty of loyalty, to pursue a good faith strategy to maximize profits for the stockholders. The directors, of course, retain substantial discretion, outside the context of a change of control, to decide how best to achieve that goal and the appropriate time frame for delivering those returns."
In Finnish law I'm more familiar with it's very clear: "The purpose of a company is to make profit for its stockholders, unless otherwise prescribed in the company bylaws." (my translation)
My claim is that the idea that for-profits somehow have some benevolent interests is the main lie that keeps the populace from demanding more control over the corporations.
Yes, there's a lot of leeway for HOW to maximize the profit and on what timescale, but the purpose still has to be profit maximization. For example a court ruled against Henry Ford rising workers' wages for the benefit of the workers and the society.
I don't really understand why people struggle with this IMHO plain fact that for-profit is for-profit. Maybe it challenges the idea that "free market" will benefit us all?
https://www.wakeforestlawreview.com/2012/04/our-continuing-s...