I wouldn’t say legally required. It is in the best interest of the C suite to appease the shareholders because shareholders are the ones that say how much they get paid or if they even have a job there.
Major shareholders sign term sheets which always govern the terms of who is prioritized with profit, major decisions or in any economic event. Breaking term sheets is breaking a contract which is illegal in the sense it has legal consequence for not being adhered to. Especially if it involves a public company and is under SEC jurisdiction.
Do these term sheets specify the timeframe in which the profit is to be judged? A company could lose money for a few years on paper investing into some new business venture, then yield lots of profit in the last year.
I wouldn’t say legally required. It is in the best interest of the C suite to appease the shareholders because shareholders are the ones that say how much they get paid or if they even have a job there.
Major shareholders sign term sheets which always govern the terms of who is prioritized with profit, major decisions or in any economic event. Breaking term sheets is breaking a contract which is illegal in the sense it has legal consequence for not being adhered to. Especially if it involves a public company and is under SEC jurisdiction.
Do these term sheets specify the timeframe in which the profit is to be judged? A company could lose money for a few years on paper investing into some new business venture, then yield lots of profit in the last year.
If the law says the shareholders can fire you for not maximizing their returns, then it’s by law.
There are many ways to measure ‘maximizing returns’ though which leaves a lot of room for interpretation.
Not sure how an opinion is relevant here
Cite the statute then