Quote:
Originally Posted by Hamlet53
Well returning to the argument of whether or not the officers of a corporation are actually mandated by law to maximize profits for shareholders thus restricting them from other considerations such as responsibility to workers, the community, the environment, or even morality...
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In fact, in most (all?) western countries "officers of a corporation", who by definition are employees, have no authority to decide policy regarding the level of profit to be attained, responsibilities to workers e.g. payroll, the community, the environment, morality, pricing policies, capital expenditure, etc. Policy for those things is directed by the equity shareholders (and in some instances the providers of borrowings, etc.) through the governance of the board appointed by them (should there be one, else by the directors). The officers may prepare the likes of draft operational and capital budgets, and recommend pricing policy, for example, which lead to suggesting a profit but they cannot approve those.
Officers will be given authorities to act within the policies set by the board that represents the shareholders, and officers are obliged to stay within those. Should circumstances change meaning that a policy can no longer be complied with (e.g. there are expenditure over or underruns against budgets approved by the board) then the officers must obtain the board's approval for that change.
In the case that officers do not properly implement policy set by the board's governance then they are culpable under, at least, the employment law that they or the company are domiciled in. Should their actions be wilful and incur damage to the company they may be found liable in law for that damage.
There is no legal requirement (anywhere in western nations, as far as I am aware), as has been mentioned, for the shareholders to require that company profits be maximized, but I wasn't aware that anyone here was claiming that. However, it is a natural outcome that shareholders seek to maximize the return on their investment and the directors will set policy accordingly, taking into the account the whole business environment, the needs of the company for its own retained profits use such as expansion, and meeting the requirements of the shareholders they represent as to return on their investment in way of dividends or increased value of their stockholding (as the expansion of the business may result in).
Part of the establishment of profitability policy may allow for costs of benevolence to the community the company resides in for which no return is anticipated (such as confidential donations to a charity), or for such costs (non confidential donations to a charity, which may even be the subject of a press release) which are, in effect, advertising. Again, such policy is for the shareholders through their board to make, not the "corporation's officers".