Quote:
Originally Posted by HarryT
I don't know how it works in the US, but in the UK, the directors of a company have a legal duty to run the company "in the best interests of the shareholders". That certainly doesn't always mean maximizing profits.
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In the US, the law instead requires that the directors of a company run a business in the best interests of the "corporation", and, in fact, there's a rule that states it's automatically ASSUMED that directors do this.
This is why boards can pay themselves huge bonuses that are _not_ in the interests of the shareholders. They can argue that that it allows them to attract the best executive talent and that talent is in the bests interests of the corporations. The shareholders have to lump it
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While shareholders vote for a board, the board does not work for them. The board works for the corporation.
It's kind of like if a corporation was a cash-generating kid and the board are the guardians. As long as the kid doesn't show up to school with broken arms and legs and a bloody nose, they can do what they want with it, because they can always argue that something self-serving trickles down to help the kid.