| Kyros said: Can somebody please quote me where it is said that it is the legal obligation of a CEO to maximize profits? The CEO is appointed by shareholders (through the board). Shareholders own the company and it is the obligation of the CEO to lead the company in a way that is in the interest of the shareholders otherwise they fire him. That is normally making money (profit). But the emphasis of shareholders can be different. There are some who want to make as much money as possible short-term. There are people who have a more long-term investment and governments often also have shares in companies and care more about stability and job creation. |
Well, I already knew that, and I'd think it came across my post. My points is that I am not aware of any legal obligation for the CEO to maximize profits and/or turnover. And I don't think that there is legal grounds for shareholders to sue the CEO if the company doesn't do as well as they would like, barring gross negligence.
As for the shareholders, their intent in many cases is to maximize the share value and/or dividends, depending on the length of investment. As you pointed out, for governments and other similar entities, the intent may be totally different, such as ensuring the functioning of vital infrastructure.
In general, the biggest share owners are funds, often specifically pension funds. I have heard of cases where the representatives of the fund, in the general stockholder's assembly, oppose every single proposal. You might wonder why is that, but the explanation is rather simple: deniability. The fund is ultimately responsible for it's shareholders, and in case a company that the fund invested in does badly, they have to be able to show that it was not their fault. Unfortunately, in most cases the shareholders know next to nothing about the company or the market's where it operates, so they are unlikely to select the best possible board.
