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Comment by macksd | Hacker News Reader

As someone who doesn't really know what they're talking about, I'm also wondering how he would be getting around the widely-reported "poison pill", even if he did have $21B more.

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By asking the board to remove it. If faced with a serious tender offer backed by financing and accepted by a majority of shareholders, the board would find it difficult not to allow it to go ahead (by removing the poison pill).

That doesn't mean they couldn't refuse to remove it, but since they should act in the interests of the shareholders, they would need a good explanation (e.g. another better offer, or a plausible plan for extracting more value from Twitter than they currently do).

So, total noob here in that whole area, but I have a question about fiduciary duty.

The popular understanding seems to be that a companies' board is legally bound to act in the best (financial) interests of the shareholders - and only those. This is why hostile takeovers are a thing at all: If the acquiring company gets the majority of the target's shareholders on board (or becomes the majority), then the target's board of directors is legally bound to accept the takeover, even if it would be harmful to the company (nevermind the company's employees or customers)

How far does this go? If I'm a shareholder of McDonald's, could I sue them because they could have increased profits by lacing their burgers with cocaine but chose not to? (Or say some synthetic drug that's technically legal because it hasn't been banned yet).

If a company could make more profit but is kept from it by some regulation, could I sue them if they didn't try to lobby against that regulation?

My understanding is that courts and regulators give board members a lot of deference on their decisions, as long as they are well considered and not obviously ridiculous.

It's perfectly fine for a board to say that the legal and reputational risks far outweigh the benefits of lacing burgers with cocaine.

Most decisions, such as lobbying, involve complicated calculous and don't have a simple way to verify the ROI. The board can defend most positions (from no lobbying to lots of lobbying) by arguing that they believe it's the right decision based on their experience, judgement, and analysis of the situation; probably with some written analysis defending whatever their decision was at the time.

They don't have to make the best decision to advance the interests of the shareholders. It is impossible to know if an option that wasn't taken would have been better. They're require to act in a reasonable way that fits market norms and the data they had at the time. The decision of whether to accept Musk's proposal, regardless of how much he claims it to be the "best thing to do", is very subjective and complex. As long as they don't rely on immaterial facts (such as their dislike of Musk), it's impossible to prove that they made the wrong decision because we can't A/B test reality. They might still believe that Twitter can be worth $60B in a year and if they have enough data to support that, they can do whatever they think is right.

Could you sue them? Sure. Would you win? Probably not.

The board would likely make a compelling case that the long-term effect of lacing burgers with cocaine is a net loss for shareholders given the inevitable reputational harm, lawsuits, payouts, etc.

One key thing to know here, in addition to the replies you already received, is that the role of fiduciary duty is dramatically overstated by a lot of other HN comments.

The poison pill is there so he can't do it without approval of the board. If he comes in with a serious offer that the board decides is worthwhile, they can remove it just as easily as they added it.

By persuading the board, either directly or by turning shareholder opinion strongly enough, for them to put it to a shareholder vote.

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