Can somebody please quote me where it is said that it is the legal obligation of a CEO to maximize profits? I would be very interested in that, because I do not believe that is the case. I am fairly certain it is not the case at least in Finland, and I doubt the legislation would be that much different between western countries.
First to clarify corporate decision making:
Stockholders have the ultimate say in matters of the company, but except for a few rare cases, not directly. The general stockholder's assembly decides on the board of the company, which is the best way for them to control the company.
The board is legally responsible to the shareholders, and the board has an obligation to act in the best interests of the shareholders. This may or may not mean maximising profits, turnover etc. The board is legally responsible that the company is properly managed, hence the board appoints the CEO to manage the company as the board sees fit. The main responsibility of the board, in addition to ensuring proper management, is to make strategic decisions. In doing this, the board usually has to rely quite heavily on the CEO for detailed market information etc.
The CEO reports directly to the board. The responsibility of the CEO is to manage the operations of the company so that the company fulfils the legal and statutory requirements of the country of operation. It is also the responsibility of the CEO to execute the actions necessary to reach the strategic goals of the company.
As long as the CEO has the trust of the board, all is well. In that situation, the stockholders option is to replace the board if they wish for a different CEO. In practice, because the board members must act in the best interest of the shareholders, they are quite keen to cover their bases and change the CEO if things don't look the way they should.
