Laid-back and Passionate

Are you sure about this? The Johnson & Johnson credo which I posted above goes directly against your claim, and so does Costco's operations (where they have resisted multiple calls by Wall Street to increase prices and reduce employee pay and benefits)

I can see that not maximizing returns can cause a storm in the shareholder meetings, but can you give a source for it being a "criminal offense" to refrain from doing so?

Is it though?

I've not once heard of this actually being pursued. This line seems to me to be something of an urban myth.

Publicly traded companies (kinda) have to do what their shareholders want them to, but that doesn't have to be maximizing returns (still less maximizing returns in the short term).

Here's some comment on this with quotations from actual law, but note that (1) it's from the UK rather than the US and presumably the relevant laws aren't quite the same, and (2) the author's position is further to the left than is customary in the US. So discount it as you please. http://www.taxresearch.org.uk/Blog/2011/10/24/companies-do-n...

And a more US-centric discussion with some useful links: http://skeptics.stackexchange.com/questions/8146/are-u-s-com...

And a white paper whose main topic is executive compensation but that has a useful discussion of this issue (in section 2): http://www.neiinvestments.com/neifiles/PDFs/5.4%20Research/E... -- reading between the lines, it looks as if there's at least a case to be made that US case law requires corporations to act in the financial interests of their shareholders, but it's debatable, and in other jurisdictions there isn't even much of a case to be made.

(I am not, even slightly, a lawyer.)

I'm not a lawyer, but I have been a director of a couple of companies, including one US corporation, though not of a publicly listed company, and have been a (tiny) investor in a number of listed corporations.

There is no explicit duty to maximize shareholder returns. In most jurisdictions there is a duty for directors and officers to act in the best interest of the company and its shareholders (as a whole; most places a director does not represent a specific shareholder even if selected by a specific shareholder).

This can be interpreted as maximising returns, assuming that is what shareholders ask for, and there's no charter etc. that set out other goals for the company. But it can also mean prioritising any number of other goals as long as investors are not misled about it.

In general the board and officers have quite wide latitude as long as there's at least a plausible subjective argument to be made that their actions are in the interest of the company and shareholders on the basis that shareholders can have them replaced if they're not doing the jobs shareholders want.

Anything else would be pretty much an impossible situation, as there's no objective best course of action to maximize returns.

Utterly false. It could never be a criminal offense; it's entirely a civil matter. Additionally, courts have given companies broad latitude in determining what actions are in their shareholders best interests. In multiple cases courts have accepted arguments that a company's long-term interests were best served through socially responsible actions (e.g. charitable giving) even though this would decrease immediate profits.

In Dodge v. Ford Motor Co., the only reason the court found in favor of the shareholders was that Ford explicitly testified that he thought his company was making too much money and he felt obliged to use the money to benefit the public. Even this ruling, which is the one that established the "maximizing shareholder returns" precedent, stopped short of preventing Ford from taking the public-benefiting actions that the shareholders wanted to prevent, it merely required the company to continue paying dividends to the shareholders.

I like to quote the Johnson & Johnson credo, written in 1943 by the founding chairman before the company went public. It mirrors your SJ priorities very closely (and I think it's important since JNJ shows that such priorities don't have to be a virtue limited to tech companies):

We believe our first responsibility is to the doctors, nurses and patients, to mothers and fathers and all others who use our products and services. In meeting their needs everything we do must be of high quality. We must constantly strive to reduce our costs in order to maintain reasonable prices. Customers' orders must be serviced promptly and accurately. Our suppliers and distributors must have an opportunity to make a fair profit.

We are responsible to our employees, the men and women who work with us throughout the world. Everyone must be considered as an individual. We must respect their dignity and recognize their merit. They must have a sense of security in their jobs. Compensation must be fair and adequate, and working conditions clean, orderly and safe. We must be mindful of ways to help our employees fulfill their family obligations. Employees must feel free to make suggestions and complaints. There must be equal opportunity for employment, development and advancement for those qualified. We must provide competent management, and their actions must be just and ethical.

We are responsible to thecommunities in which we live and work and to the world community as well. We must be good citizens -- support good works and charities and pay our fair share of taxes. We must encourage civic improvements and better health and education. We must maintain in good order the property we are privileged to use, protecting the environment and natural resources.

Our final responsibility is to our stockholders. Business must make a sound profit. We must experiment with new ideas. Research must be carried on, innovative programs developed and mistakes paid for. New equipment must be purchased, new facilities provided and new products launched. Reserves must be created to provide for adverse times. When we operate according to these principles, the stockholders should realize a fair return.

http://www.jnj.com/wps/wcm/connect/c7933f004f5563df9e22be1bb...