Wasn't there some law suit from Chrysler, who tried to _stop_ him doing that? Presumably because it would give workers too much wage setting power in the market?
When someone tells you "my hands are tied" it's always worth asking whether they made the rope
It's not worth asking, as they're lying and they know it. It does not mean every decision made has to be to maximize shareholder wealth. As you're pointing out, even if incorrectly interpreted as such, any decision could be justified as doing so besides outrageous cases of intentionally tanking the company. This, in turn, is why no business gets prosecuted over this either.
As I write this, you're right, it has poisoned us; it has mistakenly made a number of laymen believe that this is one of the reasons why greedy, evil psychopaths such as Mark Zuckerberg and tens of thousands of lesser known names, behave the way they do, that law is to blame for their decisions.