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Forbes
4 days ago
- Business
- Forbes
The Basic Corporate Error Of Maximizing Shareholder Returns
Word dividends on calculator display. Payments to shareholders. Profit from trading securities. ... More Business concept. Finance revenue. 3d render Chief executives typically look to improve the fortunes of a company and returns to shareholders. Many take to heart the argument Milton Friedman made in a 1970 New York Times op-ed that the 'social responsibility of business is to increase its profits.' That has been further interpreted as meaning the responsibility to maximize return on investment to shareholders. The presumption has become the foundation of many arguments of what businesses should do, the degree of legal constraints that ought to be taken removed from their behavior, This is both legally incorrect and strategically troubling and mistaken. Experts in corporate governance have, across many years, tried to find a legal basis for the prescription. It has yet to appear. In the 2014 Supreme Court decision in 'Burwell, Secretary of Health and Huma Services, et. al. v. Hobby Lobby Stores,' the Court addressed whether a for-profit corporation could give money to religious causes. 'While it is certainly true that a central objective of for-profit corporations is to make money, modern corporate law does not require for-profit corporations to pursue profit at the expense of everything else, and many do not do so,' Justice Samuel Alito wrote for the Court. Corporate law and governance also recognize that a company's board and executives have duties to the company Are shareholders legally important in a corporate structure? Absolutely. They have rights and corporate law ensures them. The corporation has duties. Harvard Business School Professor Nien-hê Hsieh explains the concept of fiduciary duties to shareholders in an online course. 'Rather than require specific outcomes–such as achieving maximum share price–fiduciary duties are largely about conduct, process, and motivation,' she wrote. A company has the responsibility to provide relevant information about corporate performance, to act in good faith, to act with diligence and prudence. Corporate managers and boards are charged with strategy and operations for the company's benefit, shareholder's benefit being an offshoot just as profit is a result of intelligent business operation that makes customers happy. In basic calculus, math students learn that you cannot maximize for more than one variable at a time. That doesn't mean one factor cannot benefit while another does as well. However, the definition of maximization means that one thing requires precedence over others. Something has to come first; everything becomes subject to that desire. The tenet of shareholder interest maximization would require managers and boards to do things that were detrimental to the success of the company. They would need to consider shortchanging workers, business partners, and customers. Every decision would be based on how to extract more value from every source — actions that would ultimately turn every broader concept of stakeholder into enemies. Many of the best potential employees, partners, and customers would go elsewhere, a terrible outcome for a business. The maximization tenet also assumes that every shareholder has identical interests. This is far from true. It is perfectly possible for a company to have shareholders that vary widely in their investment strategies, like a Warren Buffett looking to hold shares for a long time and see the company develop, and a Carl Icahn who would be comfortable splitting a company up into parts and selling them off to get a quicker return. That's the irony of maximizing shareholder value, because it's impossible. Shareholders have different outlooks, want their investments to do different things, expect increased value through different ways. Why spend time defending and using something that makes no logical or legal sense?
Wall Street Journal
20-05-2025
- Politics
- Wall Street Journal
A Supreme Court Injustice to a District Judge
The Supreme Court held last week that the government needs to provide more notice to alleged alien enemies before deporting them. The 7-2 ruling in A.A.R.P. v. Trump wasn't itself a surprise; the court had already signaled skepticism of the president's use of the Alien Enemies Act of 1798. But in the unsigned opinion, the justices did an injustice to James Wesley Hendrix, the presiding judge in Lubbock, Texas. The high court accused Judge Hendrix of 'inaction'—of failing to act quickly enough and thereby denying the aliens due process. In dissent, Justice Samuel Alito (joined by Justice Clarence Thomas) said this accusation was 'unfair' and that 'we should commend' the judge's 'careful approach.' The dissenters are right. Judge Hendrix's service was exemplary. The majority was wrong to malign this judge and sent a disturbing message about procedural norms.
Yahoo
17-05-2025
- Politics
- Yahoo
Supreme court blocks Trump bid to resume deportations under 1798 law
The supreme court has rejected the Trump administration's request to remove a temporary block on deportations of Venezuelans under a rarely used 18th-century wartime law. Over two dissenting votes, the justices acted on an emergency appeal from lawyers for Venezuelan men who have been accused of being gang members, a designation that the administration says makes them eligible for rapid removal from the United States under the Alien Enemies Act of 1798. The court, which returned the case to a federal appeals court, had already imposed a temporary halt on deportations from a north Texas detention facility in a middle-of-the-night order issued last month. Justice Samuel Alito wrote the dissent, joined by Justice Clarence Thomas. Donald Trump responded on social media, with a post that claimed: 'THE SUPREME COURT WON'T ALLOW US TO GET CRIMINALS OUT OF OUR COUNTRY!' 'The Supreme Court of the United States is not allowing me to do what I was elected to do,' Trump added in a subsequent post, in which he also claimed, falsely, that the justices 'ruled that the worst murderers, drug dealers, gang members, and even those who are mentally insane, who came into our Country illegally, are not allowed to be forced out without going through a long, protracted, and expensive Legal Process, one that will take, possibly, many years for each person.' Related: Alien Enemies Act: what is it and can Trump use it to deport gang members? The case is among several making their way through the courts over the president's proclamation in March calling the Tren de Aragua gang a foreign terrorist organization engaged in an 'invasion of the United States', and as such subject to deportation under the 1798 statute. However, a recently declassified memo showed US intelligence agencies rejected a key claim the administration made to justify invoking the wartime law – that Venezuela's government was orchestrating the gang's operations. The supreme court case stems from a lawsuit filed by the American Civil Liberties Union and the ACLU of Texas, challenging Trump's invocation of the Alien Enemies Act. At issue is whether people must have the opportunity to contest their removal from the United States, without determining whether Trump's invocation of the law was appropriate. 'We recognize the significance of the government's national security interests as well as the necessity that such interests be pursued in a manner consistent with the constitution,' the justices said in an unsigned opinion. In a statement, Lee Gelernt, the deputy director of the ACLU's Immigrants' Rights Project and lead counsel, said: 'The court's decision to stay removals is a powerful rebuke to the government's attempt to hurry people away to a Gulag-type prison in El Salvador. The use of a wartime authority during peacetime, without even affording due process, raises issues of profound importance.' At least three federal judges have said Trump was improperly using the AEA to speed deportations of people the administration says are Venezuelan gang members. On Tuesday, a judge in Pennsylvania signed off on the use of the law. The court-by-court approach to deportations under the AEA flows from another supreme court order that took a case away from a judge in Washington DC and ruled detainees seeking to challenge their deportations must do so where they are held. The justices said in April that people must be given 'reasonable time' to file a challenge. The court has rejected the 12 hours the administration has said would be sufficient, but has not otherwise spelled out how long it meant. The US district judge Stephanie Haines ordered immigration officials to give people 21 days in her opinion in which she otherwise said deportations could legally take place under the AEA. In its opinion, the supreme court pointed to the case of Kilmar Ábrego García, a Maryland resident the administration admitted it wrongly deported to a notorious prison in El Salvador as a result of an 'administrative error'. The president and other high-ranking administration officials have repeatedly said Ábrego García would never be allowed back in the US, despite a supreme court order instructing the government to 'facilitate' his return. Related: Venezuelans deported by Trump are victims of 'torture', lawyers allege Highlighting the administration's argument that it was 'unable to provide for the return of an individual deported in error to a prison in El Salvador', the court concluded that the 'detainees' interests at stake are accordingly particularly weighty'. 'Under these circumstances, notice roughly 24 hours before removal, devoid of information about how to exercise due process right to contest that removal, surely does not pass muster,' the justices wrote. However, the court also made clear that it was not blocking other ways the government may deport people. The decision comes one day after the court appeared troubled by an executive order Trump signed on his first day in office that seeks to end birthright citizenship, which contradicts precedent upholding the plain text of the 14th amendment as granting citizenship to 'all persons born or naturalized in the United States'.
New York Times
16-05-2025
- Politics
- New York Times
Supreme Court Retains Temporary Block on Using Wartime Law to Deport Venezuelans
The Supreme Court announced on Friday that it would keep in place a temporary block on deportations of Venezuelan migrants accused of being members of a violent gang and threatened with removal from the country under a rarely invoked wartime law. The justices sent the case back to a federal appeals court, directing it to examine claims by the migrants that they could not be legally deported under the Alien Enemies Act, the centuries-old law invoked by the Trump administration. The justices said the appeals court should also examine what kind of notice the government be required to provide that would allow migrants the opportunity to challenge their deportations. The court said its order would remain in place until the U.S. Court of Appeals for the Fifth Circuit ruled and the Supreme Court considered any appeal from that ruling. Justice Samuel A. Alito Jr. wrote a dissent. He was joined by Justice Clarence Thomas. The Trump administration has attempted to use the law as a tool in its signature initiative to speed the deportation of millions of migrants, leading to a clash with a skeptical judiciary. The Supreme Court has already weighed in on the issue once, agreeing in early April to temporarily allow the administration to proceed with its use of the law, provided it gave migrants subject to it the opportunity to challenge their deportations in court. As those challenges have been filed, several lower court judges have concluded that the administration has exceeded the scope of the law, which can be invoked only when the United States has been subject to 'invasion' or 'predatory incursion,' and have blocked the deportation of groups of Venezuelans. Want all of The Times? Subscribe.
Reuters
16-05-2025
- Politics
- Reuters
US Supreme Court maintains block on Trump deportations under wartime law
May 16 (Reuters) - The U.S. Supreme Court on Friday kept in place its block on President Donald Trump's deportations of Venezuelan migrants under a 1798 law historically used only in wartime after their lawyers said the government was set to remove the men without judicial review in violation of a prior order by the justices. The justices, after ordering on April 19 a temporary stop to the administration's deportations of dozens of migrants being held at a detention center in Texas, granted a request by American Civil Liberties Union attorneys representing the migrants to maintain the halt on the removals for now. The Supreme Court also clarified that the administration was free to pursue deportations under other provisions of U.S. immigration law. Trump's deportations are part of the Republican president's immigration crackdown since he returned to office in January. Conservative Justices Samuel Alito and Clarence Thomas publicly dissented from Friday's decision. This was the second time that Trump's actions concerning Venezuelan migrants had come before the Supreme Court in a legal dispute that has raised questions about his administration's willingness to comply with limits set by the nation's highest judicial body. ACLU lawyers had asked the Supreme Court to intervene after reporting that migrants held at the Bluebonnet immigration detention center were at imminent risk of removal. The lawyers said that administration officials had not provided the migrants the required notice or opportunity to contest the removals to a prison in El Salvador before many were loaded on buses headed to the airport. The Supreme Court on April 7 placed limits on how deportations under the Alien Enemies Act may occur even as the legality of that law's use for this purpose is being contested. The justices required that detainees receive notice "within a reasonable time and in such a manner" to challenge the legality of their removal. The administration accuses the migrants of being members of Tren de Aragua, a criminal gang originating in Venezuelan prisons that the State Department has designated as a foreign terrorist organization. Trump has invoked the 1798 Alien Enemies Act in a bid to swiftly deport them. Relatives of many of the hundreds of deported Venezuelans and their lawyers have denied that they are Tren de Aragua members and have said they were never given the chance to contest the administration's allegations of gang affiliation. The Alien Enemies Act authorizes the president to deport, detain or place restrictions on individuals whose primary allegiance is to a foreign power and who might pose a national security risk in wartime. The U.S. government last invoked the Alien Enemies Act during World War Two to intern and deport people of Japanese, German and Italian descent. The Justice Department had told the justices that the request by the migrants to the Supreme Court was premature because "they improperly skipped over the lower courts before asking this one for relief." In a filing, U.S. Solicitor General D. John Sauer said detainees are receiving advance notice of their removals and have had "adequate time" to file claims for judicial review. ACLU lawyers pushed back on this assertion, saying that a lower court judge had not acted despite evidence that the migrants were being readied for imminent removal and "would almost certainly have been removed" had the Supreme Court not intervened. The migrants were loaded on to buses that left the Bluebonnet facility in Texas, only later to be turned around "presumably because of applicants' filing in this court," the lawyers said. The Trump administration has sent deportees to El Salvador, where they are being detained in the country's maximum-security anti-terrorism prison under a deal in which the United States is paying President Nayib Bukele's government $6 million. Transferring "large numbers of individuals it intends to remove under the AEA (Alien Enemies Act) between judicial districts and providing English-only AEA notices less than 24 hours before removal and without any explanation as to how the individual may seek judicial review cannot by any stretch be said to comply with this court's order that notice must be sufficient to permit individuals actually to seek habeas review," the ACLU said in a written filing. Habeas corpus relief refers to the right of detainees to challenge the legality of their detention. It is considered a bedrock right under U.S. law.
