> Activism has been a big problem for drug companies
Forgive me if I'm wrong, but isn't it kinda up to the shareholders?
If shareholders value something other than the "long term value" you speak of (I guess share price and dividends) then that's their prerogative surely? If I want to buy a controlling stake in a company but my idea of value is, say, sacrificing profit at the expense of employee perks and charitable efforts, then this is my "shareholder value" and isn't it then the responsibility of the company to provide that?
Likewise, if I buy shares in a company and then want that company fire all the highly paid people so profits go up to enable me to flip my shares for more money, that's my value and isn't it therefore up to the company to do that?
In summary, if the value of a company is measured by what the shareholders want, then it can't be a problem if the company does the thing that the shareholders want, even if that's destroying what you see as the "long term value" of the company.
It might not be what you want as a founder or CEO when you IPO, but those are the rules, those are the risks and you have to take them if you want to play the system?
I think your points highlights the contrast between how the US thinks of corporate stewardship (shareholders get complete discretion) with how many German companies do (stakeholders all contribute to board-level decision-making).
In the US it seems entirely reasonable that an owner should be able to undermine the long-term viability of something they own, but in Germany other stakeholders - the larger community the company exists in, the employees of the company -- get a seat at the table to determine the company's course.
I'm not advocating for either, just an interesting distinction.
For what it's worth this is my limited understanding of the way the US stock market works from my observations over 17 years in the UK :)
Personally I'm a big fan of the "middle ground" European model that seems to be, "capitalism with boundaries", as far as I can tell unfettered capitalism is incredibly destructive and unfair.
Forgive me if I'm wrong, but isn't it kinda up to the shareholders?
If shareholders value something other than the "long term value" you speak of (I guess share price and dividends) then that's their prerogative surely? If I want to buy a controlling stake in a company but my idea of value is, say, sacrificing profit at the expense of employee perks and charitable efforts, then this is my "shareholder value" and isn't it then the responsibility of the company to provide that?
Likewise, if I buy shares in a company and then want that company fire all the highly paid people so profits go up to enable me to flip my shares for more money, that's my value and isn't it therefore up to the company to do that?
In summary, if the value of a company is measured by what the shareholders want, then it can't be a problem if the company does the thing that the shareholders want, even if that's destroying what you see as the "long term value" of the company.
It might not be what you want as a founder or CEO when you IPO, but those are the rules, those are the risks and you have to take them if you want to play the system?