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Comment by uoaei | Hacker News Reader

Show me where in the law does it say "companies are obligated to make their shareholders happy." Your flippant use of the word "should" is all you have to go on so far.

If you don't like what they're doing, you are free to divest. This is a free market after all!

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Dodge vs Ford Motor co. : "A business corporation is organized and carried on primarily for the profit of the stockholders"

The general reading of the fiduciary duty to shareholders is that directors of corporations are bound to promote the value of the corporation for the benefit of the shareholders.

Which was a Michigan supreme court ruling. There have been other later cases which interpreted the duties of the directors and officers more narrowly. Even the Dodge vs. Ford case contained: "courts of equity will not interfere in the management of the directors unless it is clearly made to appear that they are guilty of fraud or misappropriation of the corporate funds, or refuse to declare a dividend when the corporation has a surplus of net profits which it can, without detriment to its business, divide among its stockholders, and when a refusal to do so would amount to such an abuse of discretion as would constitute a fraud, or breach of that good faith which they are bound to exercise towards the stockholders." In AP Smith vs. Barlow, in particular, it was ruled that a corporation can make a charitable donation and not breach its fiduciary duty to it shareholders.

The primary means shareholders have to change the direction of the company is to elect a different board of directors. In the case of Tesla, that requires a 2/3 majority, and Elon holds 27% of the stock.

What? My point is that the incentive structure driving that expectation is even stronger than any legally-binding requirement could hope to be. Your framing of this issue implied that short-termism is somehow a perversion of capitalism and what I’m trying to explain is that it is in reality a direct consequence of it.

>it is in reality a direct consequence of it

I agree with this. But IMO Tesla and the like are different because they're tapping into something more. People are actually excited about electric cars now, and they're willing to put money toward the goal and let Musk steer his company, taking them along for the ride.

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