I would like to think it's also partly a message that this move isn't about profit seeking. British companies do not have legal duty to maximise their profit. NYSE investors might not appreciate this foreign idea.
> While it is certainly true that a central objective of for-profit corporations is to make money, modern corporate law does not require for-profit corporations to pursue profit at the expense of everything else, and many do not do so. For-profit corporations, with ownership approval, support a wide variety of charitable causes, and it is not at all uncommon for such corporations to further humanitarian and other altruistic objectives. Many examples come readily to mind. So long as its owners agree, a for-profit corporation may take costly pollution-control and energy-conservation measures that go beyond what the law requires. A for-profit corporation that operates facilities in other countries may exceed the requirements of local law regarding working conditions and benefits. If for-profit corporations may pursue such worthy objectives, there is no apparent reason why they may not further religious objectives as well.
There is no legal duty to maximize profit.
eBay Domestic Holdings, Inc. v. Newmark A Delaware Corporation has a duty to maximize shareholder value. That's the majority of all publicly held US corporations.
So I may generalize and state, _as a fact_, that the majority of public companies in the United States of America are driven primarily by insatiable avarice in a legal duty to their shareholders.
> ...
> Jim and Craig’s defense of the Rights Plan thus fails the first prong of Unocal both factually and legally. I find that defendants failed to prove, as a factual matter, the existence of a distinctly protectable craigslist culture and further failed to prove, both factually and legally, that they actually decided to deploy the Rights Plan because of a craigslist culture. *35 I find, instead, that Jim and Craig acted to punish eBay for competing with craigslist. Directors of a for-profit Delaware corporation cannot deploy a rights plan to defend a business strategy that openly eschews stockholder wealth maximization—at least not consistently with the directors’ fiduciary duties under Delaware law.
The finding was that craigslist was looking to penalize its parent company (eBay) and destroy its own value. The issue was not about making a profit but how shares are sold.
> Notwithstanding eBay’s express right to compete, Jim and Craig were not enthusiastic about eBay’s foray into online classifieds. Accordingly, they asked eBay to sell its stake in craigslist, indicating a preference that eBay either sell its craigslist shares back to the Company or to a third party who would be compatible with Jim, Craig, and craigslist’s unique corporate culture. When eBay refused to sell, Jim and Craig deliberated with outside counsel for six months about how to respond. Finally, on January 1, 2008, Jim and Craig, acting in their capacity as directors, responded by (1) adopting a rights plan that restricted eBay from purchasing additional craigslist shares and hampered eBay’s ability to freely sell the craigslist shares it owned to third parties, (2) implementing a staggered board that made it impossible for eBay to unilaterally elect a director to the craigslist board, and (3) seeking to obtain a right of first refusal in craigslist’s favor over the craigslist shares eBay owns by offering to issue one new share of craigslist stock in exchange for every five shares over which any craigslist stockholder granted a right of first refusal in craigslist’s favor.
And at the end...
> Assuming Jim and Craig sought to establish a corporate Academie Francaise to protect the cultural integrity of craigslist’s business model, the Rights Plan simply does not serve that goal. It therefore falls outside the range of reasonableness.
> ...
> Because defendants failed to prove that they acted to protect or defend a legitimate corporate interest and because they failed to prove that the rights plan was a reasonable response to a perceived threat to corporate policy or effectiveness, I rescind the Rights Plan in its entirety.
I would also point out that this was 2010 in a Delaware Chancery court where the Hobby Lobby case was 2017 in the Supreme Court of the United States.
In any event, any such duty would be likely to be meaningless. There are so many possible areas of confusion or inconsistency:
- Profit over what time period? - Profit vs shareholder return. - What level of risk is to be taken in generating this profit?
And so on.
[1] http://in-houseblog.practicallaw.com/fallacy-of-the-duty-to-...
> Responding to lower court judges' suggestion that the purpose of for-profit corporations "is simply to make money," the court said, "For-profit corporations, with ownership approval, support a wide variety of charitable causes, and it is not at all uncommon for such corporations to further humanitarian and other altruistic objectives.
The meme of "duty to maximize profit" has no grounding in fact beyond internet comments trying to excuse unscrupulous behavior of a company with the justification that it was maximizing profits.
There is a "maximize shareholder value" (which isn't profits) but this is also recognized to be fuzzy.
https://www.mayerbrown.com/en/insights/publications/2023/03/...
> Corporate law has long required directors to act in the best interests of the corporation and its shareholders. In practice, this duty sometimes translated into a mandate to maximize shareholder value—at all costs. But while some businesspeople may follow that practice, most recognize that promoting shareholder interests invariably entails protecting the interests of others, such as employees and customers. Corporate law accommodates this reality by giving directors wide latitude in exercising their business judgment. Rather than such an impractical mandate that directors maximize shareholder value, courts say they must act in the best interests of the corporation and its shareholders.
> The flexibility in this framework entices advocates of non-shareholder interests to argue that directors owe a duty not only to the corporation and its shareholders but also to its employees, customers, and other constituents or “stakeholders.” Although this is certainly not the law, stakeholder advocates urge a norm in which directors no longer prioritize shareholder value but feel an obligation to such other constituents as well. Yet if it would be impracticable for judges to enforce a rule of shareholder value maximization, it would be more difficult to formulate a workable legal rule requiring directors to optimize across such contending interests.
The maximization of shareholder value was from Dodge v. Ford Motor Co. https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co.
> This case is frequently cited as support for the idea that corporate law requires boards of directors to maximize shareholder wealth. However, one view is that this interpretation has not represented the law in most states for some time:
> Dodge is often misread or mistaught as setting a legal rule of shareholder wealth maximization. This was not and is not the law. Shareholder wealth maximization is a standard of conduct for officers and directors, not a legal mandate. The business judgment rule [which was also upheld in this decision] protects many decisions that deviate from this standard. This is one reading of Dodge. If this is all the case is about, however, it isn't that interesting. -- M. Todd Henderson
> However, others, while agreeing that the case did not invent the idea of shareholder wealth maximization, found that it was an accurate statement of the law, in that "corporate officers and directors have a duty to manage the corporation for the purpose of maximizing profits for the benefit of shareholders" is a default legal rule, and that the reason that "Dodge v. Ford is a rule that is hardly ever enforced by courts" is not that it represents bad case law, but because the business judgement rule means:
> The rule of wealth maximization for shareholders is virtually impossible to enforce as a practical matter. The rule is aspirational, except in odd cases. As long as corporate directors and CEOs claim to be maximizing profits for shareholders, they will be taken at their word, because it is impossible to refute these corporate officials' self-serving assertions about their motives. -- Jonathan Macey