

Ask HN: Corporation types and "maximizing shareholder value"? - dlytle

I've been wondering for a while if there's a form of corporation that doesn't force the company/board to, as I've seen it called, "maximize shareholder value".<p>Of course, making money for the shareholders and company is always a driving goal.  What worries me are situations where making money for shareholders, and the survival/growth of the business, are at odds.<p>One possibility would be a policy change that has the potential to generate income, at the cost of user trust/loyalty.  (Beacon, for instance.)<p>Are there any corporation types that handle such a situation better than others?  (From the perspective of the founders.)
======
jacquesm
There's a 'foundation' type, they don't have a profit motive.

I assume you're asking this from a USA perspectie, the wikipedia page on
foundations has this to say:

"In the United States, many philanthropic and charitable organizations are
considered to be foundations. However, the Internal Revenue Code distinguishes
between private foundations (usually funded by an individual, family, or
corporation) and public charities (community foundations or other nonprofit
groups that raise money from the general public). Private foundations have
more restrictions and fewer tax benefits than public charities."

------
robdimarco
If the founders care about not being forced to "maximize shareholder value",
simply don't give out any controlling equity to non-founders. Consider how the
NY Times or Washington Post, and WSJ operated for a long time. The controlling
interest was held by a single family and not by all of the common
shareholders.

If you want to take outside investment, part of the deal is that the company
no longer just belongs to the founder. You no have other parties. If you don't
like it, don't take the money.

------
frisco
Shareholder value and revenue aren't necessarily the same thing at very early
stage companies. Shareholder value can be built through brand recognition and
integrity, and sacrificing that for short term revenue is destroying long term
shareholder value.

Shareholder value should never be at odds with the goals of the company in the
ways you described. It could, on the other hand, be at odds with your personal
goals (i.e., blocking a small exit), but that's very different.

------
jhancock
I hear the "maximize shareholder value" rule quite a bit. But I have never
seen a reference to a law that proclaims it or defines what it means. Can
anyone find such a reference?

