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.
That is from the loyalty section. Shareholders best interests are achieved by balancing the various duties, as I said.
That is why I said that it isn’t about short term profits necessarily. The best interest of the shareholders is not short term profit seeking that destroys the business. It is long term profits and a company that can continue to generate them.
It would be very difficult to argue that decisions damaging profitability in the long term are in shareholders best interests.
In this case, union busting, clearly executives think union busting is in the best interests of shareholders. If that isn’t because of profitability, why is it not in their intersts?
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.
That is from the loyalty section. Shareholders best interests are achieved by balancing the various duties, as I said.
That is why I said that it isn’t about short term profits necessarily. The best interest of the shareholders is not short term profit seeking that destroys the business. It is long term profits and a company that can continue to generate them.
It would be very difficult to argue that decisions damaging profitability in the long term are in shareholders best interests.
In this case, union busting, clearly executives think union busting is in the best interests of shareholders. If that isn’t because of profitability, why is it not in their intersts?