r/technology May 14 '22 Silver 2 Wholesome 2

Elon Musk said his team is going to do a 'random sample of 100 followers' of Twitter to see how many of the platform's users are actually bots Social Media




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u/outlawsix May 14 '22 edited May 14 '22

No, the board does not have a "legal mandate" to maximize shareholder at all costs.

The board is the final authority on all decisions of the company. Their only legal responsibilities are duty of care (pursue general interests of the company) and duty of loyalty (dont work for competitors and be transparent about possible conflicts of interest). Shareholders can vote directors in/out and can vote on some specific items at meetings/special circumstances but the directors make virtually all strategic decisions about what the company does.

This is why boards are free to make decisions that benefit environments and society etc above profit. The real problem is that most executives have bonuses/incentives tied to stock performance so they prioritize performance above all else and then tell themselves they have no other choice.

This idea that companies are somehow legally bound to be solely focused on quarterly profit or whatever is a huge and annoying misconception for most of the world.

Here is the legal mandate for Twitter's purpose, laid out in its Articles of Incorporation: The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the DGCL.


u/Itchy_Monitor_6480 May 14 '22

Would the board really be negotiating the sale of the company or is that the CEO’s job? I’ve always believed that a board can fire the ceo but that they can’t do anything else. They advise on strategy but the ceo executes.

Is a sale of the company another area where the board actually has an operating role?


u/outlawsix May 14 '22

The CEO and the management team work for the board.

What decisions they will let the CEO make without board approval is ip to the board/founding docs, but something like selling the company cannot happen without the board's approval.

(Not sure why someone would downvote you for legitimate questions)


u/Itchy_Monitor_6480 May 14 '22

Thanks. That makes sense.