They owe a fiduciary duty of loyalty to shareholders - they (named executives) must act in the best interests of shareholders. So that doesn’t necessarily mean doing everything possible at all times to maximize profits/share price in the short term, it does mean they need to attempt to do that in the long term while balancing that duty against other duties they owe (like to act lawfuĺly).
“Rather than require specific outcomes–such as achieving maximum share price–fiduciary duties are largely about conduct, process, and motivation,” says Harvard Business School Professor Nien-hê Hsieh in the online course Leadership, Ethics, and Corporate Accountability.
A fiduciary duty does not require the CEO maximize shareholder profits in the long-term or short-term. It requires obedience, openness, care, and not acting to enrich themselves.
<3 Co-ops. I’m a union member at a co-op. It’s as good as it gets for a working class person in the US. Seeing the light was the beginning of my radicalization. Add a little theory and the great awakening was complete. 🫡
Requesting time off is just a formality. There’s no harassment for using sick leave. Around 3% raises every year, usually, it’s negotiated. We still have a pension with rule of 85. Stand by pay while on call. Full wages paid while serving on jury duty. Some rarer benefits would be around $2k paid towards hearing aids and lasik.
The ability to leave work at work is priceless. There’s a line drawn in the sand and it’s respected.
We’ve had some employees paid to retire early, but I’m unaware of any layoffs throughout the history of the company.
It’s pretty wonderful. It’s the way everyone should be treated regardless of where they’re employed. Or unemployed. The profits over people bullshit has gotten outta hand.
When workers are not exploited, there are fewer in precarious situations. Consider the following scenario.
You have to work 12-hour long shifts, 6 days a week. Travel to and from work takes one hour each way. You need to sleep 8 hours. Eating takes up an hour (let’s say 30 min breakfast&lunch, 30 min dinner).
That leaves you with effectively 2 hours a day that’s for yourself. And that’s excluding meal preparation times, so you’ll likely prefer to microwave. And if you’re a parent, you have even less time. You also don’t have much of a “weekend” to recover. So you cut on sleep and that will directly impact your wellbeing. That won’t help raise children in a safe environment. Nor will other coworkers and people be that thrilled to deal with a constant grumpy person. And nor do you want to be this person!
Now, how much do you then make? Let’s say you make $10 an hour. You’ll thus earn $720 a week, but most of that will go to groceries, travel costs like petrol/electricity, energy and utility, and rent/mortgages. So you’ll en up with barely any reserves to stock up… so if there’s a crisis, you’re fucked, and need to go into debt - and who will profit from that? The banks and CEOs, again.
Let’s say also that there are 1,000 employees, of which 900 workers, 75 mid-range and 25 CEO-board. The workers earn $10, the mid-rangers $15, the CEOs $115 an hour. Together, that all makes $13,000 an hour.
Most of the profit made, goes to the CEOs. When we divide income far more equally and remove those excess bonuses, and enable shorter travel times by good urban planning, we can imagine a scenario like this:
You’ll work 4 days a week, 6 hours a day, 30 min both ways total for travel. Dinner can now be prepared instead of microwaved, and that’s healthier and cheaper, so let’s say food total takes 1.5 hours now. That leaves you with 8 hours for yourself. Much better.
You work 24 hours a week, of which most hours now productively spent at work instead of dozing off and counting the hours. And due to co-ops distributing the income much fairer among all, you might earn $20 an hour.
Let’s now assume there are no CEOs, only workers who all can decide, although some do the day-to-day administration and can be directly recalled.
All earn $13 an hour. The workers significantly benefit, while the mid-rangers also benefit from the much better work-life balance. It’s also conceivable that with this improved live standard, they will be able to produce more, and eventually, go beyond $15 an hour for all… perhaps $20.
Hence, a co-op not only improves wellbeing for all, but also for society. Reduced healthcare costs, reduced travel time costs and waste of fuel, and so on. But in my view, wages are part of the problem; a gift economy with a give-it-forward system would be ideal, with market co-op democratic socialism (with independent trade unions) a close behind.
They have a fiduciary responsibility to the corporation and the shareholders. Increasing salaries to retain talent is part of this responsibility. However it is common for CEOs to mostly focus only on shareholders - mostly because their income mostly comes from shares.
This is why you always hear “they have a fiduciary responsibility to the shareholders “ and nothing else. It greatly lines their own pockets to perpetuate this.
It also depends on the state the company is incorporated in, but yeah that’s true.
And it is a duty to the corporation (legal entity), notably not to the workers themselves; so while the interests of workers and the corporation may align sometimes - you don’t have to do what’s best for the workers if it isn’t best for the company.
You still need to operate lawfully, and you can’t pay so little that you can’t hire/retain anyone, and you need to pay enough that you can hire people skilled enough to do the job, but you need to pay (ideally) only that amount and no more. Anything else takes away from profits and, you could say, makes the company less likely to succeed - if the company doesn’t succeed, then no one would have jobs. Or so they’d argue.
The same as for goods, the price of labor is treated by employers as “what the market will bear”. For goods, that means higher prices, for labor it means lower prices.
The reason for this is pretty simple: necessity.
CompaniesCorporations have a fiduciary duty to maximize profits for shareholders.If no union exists, that means depressing wages as much as possible while meeting staffing needs.
If a union is forming, it means spending as much as you need to stop it since, if you don’t, you’ll be unable to depress wages over the long term.
When a union exists, well then they have to negotiate to continue operations and so workers get paid more fairly.
Join or organize a union if you can.
Apparently that’s a myth. CEO’s of public for-profit corporations just need to be competent and without a conflict of interest.
EDIT: This is true even with the caveat that birdwing listed.
https://online.hbs.edu/blog/post/fiduciary-duty-to-investors
They owe a fiduciary duty of loyalty to shareholders - they (named executives) must act in the best interests of shareholders. So that doesn’t necessarily mean doing everything possible at all times to maximize profits/share price in the short term, it does mean they need to attempt to do that in the long term while balancing that duty against other duties they owe (like to act lawfuĺly).
A fiduciary duty does not require the CEO maximize shareholder profits in the long-term or short-term. It requires obedience, openness, care, and not acting to enrich themselves.
Only public companies have that ‘duty’.
Co-ops don’t, their duty is to maximise wellbeing for all workers in them and concurrently society.
<3 Co-ops. I’m a union member at a co-op. It’s as good as it gets for a working class person in the US. Seeing the light was the beginning of my radicalization. Add a little theory and the great awakening was complete. 🫡
Sadly not a member of one, though I’m a union member. How is stuff in there?
Requesting time off is just a formality. There’s no harassment for using sick leave. Around 3% raises every year, usually, it’s negotiated. We still have a pension with rule of 85. Stand by pay while on call. Full wages paid while serving on jury duty. Some rarer benefits would be around $2k paid towards hearing aids and lasik.
The ability to leave work at work is priceless. There’s a line drawn in the sand and it’s respected.
We’ve had some employees paid to retire early, but I’m unaware of any layoffs throughout the history of the company.
It’s pretty wonderful. It’s the way everyone should be treated regardless of where they’re employed. Or unemployed. The profits over people bullshit has gotten outta hand.
True! Co-ops are great
How did society get in the equation? If they’re maximizing the wellbeing of their workers, how are non-workers (society) benefitting?
When workers are not exploited, there are fewer in precarious situations. Consider the following scenario.
You have to work 12-hour long shifts, 6 days a week. Travel to and from work takes one hour each way. You need to sleep 8 hours. Eating takes up an hour (let’s say 30 min breakfast&lunch, 30 min dinner).
That leaves you with effectively 2 hours a day that’s for yourself. And that’s excluding meal preparation times, so you’ll likely prefer to microwave. And if you’re a parent, you have even less time. You also don’t have much of a “weekend” to recover. So you cut on sleep and that will directly impact your wellbeing. That won’t help raise children in a safe environment. Nor will other coworkers and people be that thrilled to deal with a constant grumpy person. And nor do you want to be this person!
Now, how much do you then make? Let’s say you make $10 an hour. You’ll thus earn $720 a week, but most of that will go to groceries, travel costs like petrol/electricity, energy and utility, and rent/mortgages. So you’ll en up with barely any reserves to stock up… so if there’s a crisis, you’re fucked, and need to go into debt - and who will profit from that? The banks and CEOs, again.
Let’s say also that there are 1,000 employees, of which 900 workers, 75 mid-range and 25 CEO-board. The workers earn $10, the mid-rangers $15, the CEOs $115 an hour. Together, that all makes $13,000 an hour.
Most of the profit made, goes to the CEOs. When we divide income far more equally and remove those excess bonuses, and enable shorter travel times by good urban planning, we can imagine a scenario like this:
You’ll work 4 days a week, 6 hours a day, 30 min both ways total for travel. Dinner can now be prepared instead of microwaved, and that’s healthier and cheaper, so let’s say food total takes 1.5 hours now. That leaves you with 8 hours for yourself. Much better.
You work 24 hours a week, of which most hours now productively spent at work instead of dozing off and counting the hours. And due to co-ops distributing the income much fairer among all, you might earn $20 an hour.
Let’s now assume there are no CEOs, only workers who all can decide, although some do the day-to-day administration and can be directly recalled.
All earn $13 an hour. The workers significantly benefit, while the mid-rangers also benefit from the much better work-life balance. It’s also conceivable that with this improved live standard, they will be able to produce more, and eventually, go beyond $15 an hour for all… perhaps $20.
Hence, a co-op not only improves wellbeing for all, but also for society. Reduced healthcare costs, reduced travel time costs and waste of fuel, and so on. But in my view, wages are part of the problem; a gift economy with a give-it-forward system would be ideal, with market co-op democratic socialism (with independent trade unions) a close behind.
Remarkable how the answer hinges on this fantasy union magically retroactively changing city planning.
Capitalism. Minmaxxing human lives.
They have a fiduciary responsibility to the corporation and the shareholders. Increasing salaries to retain talent is part of this responsibility. However it is common for CEOs to mostly focus only on shareholders - mostly because their income mostly comes from shares.
This is why you always hear “they have a fiduciary responsibility to the shareholders “ and nothing else. It greatly lines their own pockets to perpetuate this.
It also depends on the state the company is incorporated in, but yeah that’s true.
And it is a duty to the corporation (legal entity), notably not to the workers themselves; so while the interests of workers and the corporation may align sometimes - you don’t have to do what’s best for the workers if it isn’t best for the company.
You still need to operate lawfully, and you can’t pay so little that you can’t hire/retain anyone, and you need to pay enough that you can hire people skilled enough to do the job, but you need to pay (ideally) only that amount and no more. Anything else takes away from profits and, you could say, makes the company less likely to succeed - if the company doesn’t succeed, then no one would have jobs. Or so they’d argue.
The same as for goods, the price of labor is treated by employers as “what the market will bear”. For goods, that means higher prices, for labor it means lower prices.