That’s a lie that the execs tell. Yes, they do have a duty to the shareholders, but the lie is that they are allowed to exercise their reasonable business judgement, which actually gives them very broad latitude to determine what’s in the shareholders interest.
The execs could easily argue that in their business judgement it’s in the shareholders best interests if they make a long term play, and chose to forego maximizing profits in the short term, and instead maintain positive customer goodwill in the interests of maximizing profits over a longer time span.
As long as they can provide some plausible reasoning behind their decision, they’re safe.
So, the “I have to maximize shareholder value” argument is… on the surface true, but hides a ton of autonomy and decision making power that the executives have.
About ten years ago, an activist investor tried to get Apple to reduce their green stance, in favor of profit. They wanted Apple to commit to only working for profit and shareholder return.
Tim Cook got visibly angry at them, and told them that it was a core principle, and there was no way that Apple would compromise on it.
Say what you will about him, but he has personal reasons for valuing privacy, and he knows that compromising one core principle, in favor of profit, will inevitably lead to compromising customer information.
Looks like he made the right call. Apple is closing in on $3T.
Tim Cook also acted from a place of strength. That was one investor, and Apple was (and still is) rolling in more money than it quite literally knows what to do with.
I wonder if Tim Cook could get away with it if margins were slimmer, and Apple wasn't the most ludicrous cash making machine since Standard Oil.
Thats my worry, when Apple (and they very well may, who knows) takes a dive, eventually, at some point in the future, will they start selling off the farm?
“Could get away with it” in terms of “would he be liable for a lawsuit for failing to meet the duty to shareholders”, probably not as long as he could article a reasonably justifiable reason his actions were in the shareholder interests, that isn’t directly contradicted by evidence.
“Could he get away with it” in terms of “would shareholders fire him?” maybe not. Depends on the shareholders, I guess.
