A CEO or board of directors that angers the majority of shareholders (or an outspoken minority) doesn’t last long. That correlation is absolutely clear.

Which means most CEOs and boards focus on managing shareholders at least as much as anything else they do.

I agree. Unfortunately the majority of shareholders are rich dudes who just care about their numbers going up. The whole thing is psychopathic.

They certainly wouldn’t be rich dudes for long if they were okay with the numbers going down!

What do you suggest we optimize for instead? "their numbers going up" is at least objective.

Everyone who has money in the stock market via their retirement funds care if the stock goes up

THEIR numbers going up, is the part you may be overlooking in that.

Care to clarify?

I'm assuming the person I replied to was insinuating that the people with an influential amount of voting stock are adequate representatives of the interests of small fry investors building up for retirement. My response is that if the former has the option to increase their share of wealth at the expense of the latter (like rearranging the leadership in a way that promotes short term gain at the expense of long term gain), they will take it. They're interested in their numbers, not any particular company, or the health of the market, or retirees.

Thank you for asking for clarification. I realize I responded precipitously and was too cryptic to contribute anything meaningful to the discussion.

If they didn't why would anybody be complaining about "shareholder primacy?"

And it's a check towards their own interests. Just like the CEO acts in his own interests. I can't for the life of me understand why anyone thinks the CEO is more likely to act in the best interest of employees or society than the shareholders are.

> I can't for the life of me understand why anyone thinks the CEO is more likely to act in the best interest of employees or society than the shareholders are.

Probably because shareholders can just care about money in the immediate term and don't need to actually care about any one company or its long term success. They may never know or even interact with the employees of that company on any meaningful level, and may have investments in several other companies including direct competitors so that if any one company tanks they'll still have other investments making them money hand over fist.

A CEO, particularly when they're a founder, might actually care about the company doing well and may personally know the people working for the company. They might care a lot more about the employees they work closely with on a daily basis as opposed to a shareholder who just watches numbers go up and down while deciding when best to sell. The CEO's day to day will change drastically if their company fails. A shareholder whose company does poorly just adjusts what they buys/sell the same as any other day.

A CEOs compensation is mostly stock so that doesn't make any sense. But even if that weren't true, the idea that shareholders don't care about long term prospects or don't mind when the company tanks because they have other investments is one of the most outlandish financial takes I have ever heard.

When shareholders can trade in nanoseconds to exploit random anomalies in stock prices it's harder to imagine them deeply caring about their investments in the long term. Because CEOs don't have the option to jump ship at nearing the speed of light, it's reasonable to conclude that they might just care a bit more.

HFTs and day traders inventory accounts for negligible percentage of shares. The vast majority of shares in all publicly traded companies are held by long term investors. Short term holders have no impact on corporate decision making.