At least in Delaware law, a board's fiduciary duty involves a duty of care, loyalty, and good faith. While acting to maximize their personal interests or egregiously working against profits could be considered a breach, not trying to maximally make profits probably wouldn't be.

All of this would need to be litigated on a case-by-case basis, but many modern cases have found that companies can freely act to maximize the wages of their employees at the expense of dividends or act charitably even when there aren't tax breaks.

That said, I'm not sure this really even applies in the case of Twitter---I think its not unreasonable to argue that the innate value of Twitter is so much higher than what Musk is offering that its better for the shareholders to wait even thinking purely in terms of profits (I would probably personally disagree with that, but I don't think its any more unreasonable than plenty of other valuations I see)

Yes, they don't have to maximize profits, but they also can't ignore profit to the benefit of other values they deem more important, per the very old but still in force Dodge v Ford.

As long as they are not egregiously and obviously acting against that goal, or taking decisions without deliberation, the law would favor them in any trial that only hinged on whether the price offered by Musk was better than the market. Basically the burden of proof to show that it could not have been a good business decision would lie with the plaintiff, and I very much doubt that you could build a solid case of that.

I mean, saying "We are concerned about a hostile takeover attempt by a person who isn't allowed to be an officer of a public company anymore because he has show himself either unwilling or unable to be a fiduciary for stockholders, and we are trying to protect our stockholders from him" seems like a slam dunk in court.

Musk is offering to buy out all stockholders, so if the sale goes through, he will be the sole owner of Twitter, and all current stock holders will receive cash.

On the other hand, the board can easily say "we don't beleive this deal offered by a person who isn't allowed to be a public officer of a company anymore will ever go through, either because he will retract it or because he will be unable to secure funding; and we beleive attempting the deal will hurt stock prices and profits for current shareholders" and then I agree, it would probably be a slam dunk in court.

I don't think Dodge v. Ford isn't a great case to cite here for two reasons: 1) I think the trend of accepting that corporations can exist for reasons other than to generate profit is a post-ww2 phenomenon and this case is from 1919 2) Perhaps more importantly, Dodge v. Ford was a case before the Michigan Supreme Court and, to my knowledge, has never been used in a case in Delaware.

We are the largest perennially unprofitable company to ever exist. The richest guy in the world offered to invest a fifth of his net worth into the gamble of turning our company profitable while making our shareholders a massive profit.

Instead, we poisoned the system knowing that the stock is all but guaranteed to tank massively reducing our market cap and hurting our ability to take out still more loans to continue our unprofitable venture.

But we're holding true to our other nebulous values.

They'll have a very compelling argument.

To prove a breach of fiduciary duty, you generally have a very high burden of evidence, unless you can show some conflict of interest or obvious lack of deliberation.

Otherwise, the business judgement rule is applied, where the presumption is that the directors acted in good faith, and you would essentially have to prove that it is impossible for Twitter stock to grow beyond the current offer.

What answer could they give for their actions that isn't immediately disprovable garbage?

Do you really think that discovery would show that this was all in good faith?

I'd bet heavily that a lot of ideological discussions would be disclosed. As that is completely contradictory to what Twitter claims is their goal, bad faith would be the only remaining option.

I would bet that no such ideological grounds would be found in discovery, even if it were true, unless the board are complete morons to discuss such things over email.

Instead, it is easy to expect they would discuss the sincerity of Musk's offer (the chance that they may accept it only for it to be retracted, as happened with the board membership offer), the plausibility of him having the required financing, the stock price today vs 6 months ago compared to the offer, and similar business discussions.

I also don't personally believe this is an ideological battle at all - it's much more likely to be a financial manouever or simple ego-driven ambition by Musk.

> The richest guy in the world offered to invest a fifth of his net worth into the gamble of turning our company profitable

That's his publically stated claim. Whether that's what is really going on is another question.

You gave a very clear example of a breach. To add to your point, Elon's offer is both conditional on financing and too low, so we will implement a poison pill would never be seen as a breach.

Achieve profit is not the same thing as provide value or best interest of. It could be. It does not have to be.

A for-profit company is there for profit. There is no other way to interpret shareholder value in a for-profit company, for purposes of discussing fiduciary duty.

Now, providing profit/share-holder value need not mean maximizing said profit - it just means that profit must always be considered in any business decision, it can never be entirely ignored in favor of other things.

Note that not even shareholders get to decide what kind of value they expect their board to offer them. That definition of value is set in stone by the type of corporation. The board of a for-profit company has a fiduciary duty to the shareholders of the company as pertains to profits.

If 100% of the shareholders of Twitter voted to ask the board to sacrifice profit for free speech; and the board decided to ignore this request entirely and publicly announced they would limit free speech at every trun to focus on profits, the shareholders would have no chance of winning a breach of fiduciary duty trial against the board. The board has no legal duty to uphold some abstract values that shareholders hold dear, they only have a legal duty to act in the interest of company profit as they see fit.

> it just means that profit must always be considered in any business decision, it can never be entirely ignored in favor of other things.

The word "entirely" is doing a lot of work there.

> The board of a for-profit company has a fiduciary duty to the shareholders of the company as pertains to profits.

This is a dramatic oversimplification that borders on falsehood, as you noted yourself in your previous paragraph. As a trivial example, the board would be entirely entitled to claim that their goal is very long term profit maximization, and that this will result in decades of losses (effectively Amazon's strategy).

We also now have "Public Benefit Corporation" as a codification of a for-profit corporation that does not have profit as its primary motivation (at least in 35 states & DC), but obviously that does not apply in the case of Twitter.

> As a trivial example, the board would be entirely entitled to claim that their goal is very long term profit maximization, and that this will result in decades of losses (effectively Amazon's strategy).

Yes, but that's still a profit based motivation. My point was that the board of a for-profit company doesn't have a fiduciary duty to represent non-financial interests of the company or shareholders.

That is, you can't sue the board of a for-profit company because they didn't uphold their fiduciary duty to represent your interest of having a free-speech platform, even if you had made it very clear that to you this is much more important than profits, and even if you owned 100% of shares [well, you can sue, but the case will be quickly thrown out]

Conversely, the board can always claim that they made free speech a priority because they believe that will help drive long term profits, even if shareholders asked them to focus on profits to the detriment of free speech, and even if profits immediately tanked after this decision; and they will likely win in a trial.

I'm not a corporate lawyer, and by no means an expert, but I think this is propagating one of the great myths of the last 40 years or so. Profits/finances are not the sole-arbiter of success, even in for-profit companies. A fiduciary duty is not simply to profits, but to the success of the company (however it and the shareholders measure it). Granted, they likely need money to continue with whatever is their measure of success. There will always be those that feel that the sole duty of a company is to profit, but that doesn't mean they are correct.

Ok, try to find a breach of fiduciary duty trial that didn't involve profits (discussing a for-profit company, not a public benefit company or other organization).

The famous Dodge v Ford was about Ford increasing employee wages and reducing prices, at the cost of profits. One of his main motivations was to avoid paying out dividends to the Dodge brothers, who were using said dividends to bootstrap their own car company. The trial found that Ford has ample leeway in running the company as he sees fit, but can't simply ignore profit completely or do things with the sole purpose of avoiding profit.

That trial specifically seems pretty specific to his attempt to avoid paying the Dodge brothers. And I'm not saying the courts don't sometimes say that profits are the most important thing, and I'm not even saying they aren't important. But that it's not the sole thing (or even the definition of) fiduciary and so a board of directors could, as fiduciaries, make decisions at the expense of maximizing profit.