5 ms·

This comment is a non sequitur to whether corporations have a duty to shareholders. Cited cases have nearly nothing to say for or against on that point.

• mattkrause 6y ago
  Unless I'm missing something, that's at the heart of all of these cases. In Ford v. Dodge, Ford was sitting on $60M, from which it had been paying dividends. These were stopped to reinvest the money in new factories. The Dodge brothers, who owned about 10% of Ford, sued because, per Ford's own comment, his decisions were driven by charitable interests rather than business judgement. In Shlensky v. Wrigley, Shlensky was a stockholder who believed that the Cubs were leaving money on the table by not holding night games. He sued--and lost--because the Court found that to be a plausible business decision. In Davis v. Louisville Gas Electric Co., Davis (or actually, his estate) held one type of share in the company, and opposed a reorganization plan that would have converted them to another, to his potential detriment. In re Walt Disney was a derivative suit by shareholders over the hiring and firing of Michael Orvitz, and whether his (lucrative) compensation was in the company's interests. The common theme is that the board of directors (and the CEO they appoint, etc) have wide latitude to run the company, even in ways that don't immediately benefit some (Davis) or even all (Shlensky) shareholders. They can certainly go too far (Ford) or fail to exercise much judgement at all (Caremark, where the director sold the company for a value plucked out of thin air), but as Mercantile Trading says "generally [...] courts will not upset the decisions of either directors or stockholders as to questions of policy and business management. An abundance of authority in other jurisdictions might be cited to the same effect"