Going to say the obvious, knowing nothing about this situation:
If the company is public, it has a fiduciary duty to it's shareholders to maximize profits, which means that management should act to reduce the workforce if they feel that portion returns less in profit than it costs to keep on board.
Private companies have more leeway, unless of course they have contractual obligations to uphold with private investors.
This happens in normal markets and helps to ensure companies continue to exist into the future and don't bleed out. Defunct companies can't employ anyone.
You are correct. I was wrong on the standard. They have a duty insofar as they know shareholders will replace them via voting power if they displease the majority of their shareholders, and generally shareholders want to increase value or dividends. However, that's not always the case. Shareholders could generally desire anything else. Thank you for the correction.
They are laying people off because now is the time to do it so people don't think twice about it. Best way to remove dead weight with little consequence.
When you've spent the past 30 years ensuring that your plate is always filled first by buying out the political class, of course you'll get record profits.
That don't stop your decisions from being arbitrary and just following the herd.
This is an oft repeated misrepresentation. In the US, case-law shows there is a fiduciary duty to the corporation itself, not the shareholders. And there are no laws or regulations which require the maximization of profits.
That said, voting shareholders could replace management if they deemed them to act differently than they think the next best candidate could. So there is some risk in deciding not to try and maximize the short or long (depending on voters) value of the company.
This helps to explain why the index giants like Vanguard are getting away with pushing their nonsense ESG on companies.
Is it though? Pretty understandable to be pissed off that all these companies are collecting record profits, doing layoffs, and then immediately buying back stock.
A point as banal as it is unhelpful. Perhaps if companies didn’t act like charities during good times by promising workers lavish compensation and security, entangling in more workers than necessary, and then pulling the rug from under them during bad times, then this false expectation would have never arisen.
While the link does say that seven engineers were let go, it doesn't say how many other people were. There's no additional information, is this whole story about a mere seven people? It appears to be. So were only seven laid off? Doesn't say. Seems like CNN is leaving out some information.
22 comments
[ 10.5 ms ] story [ 297 ms ] threadIf the company is public, it has a fiduciary duty to it's shareholders to maximize profits, which means that management should act to reduce the workforce if they feel that portion returns less in profit than it costs to keep on board.
Private companies have more leeway, unless of course they have contractual obligations to uphold with private investors.
This happens in normal markets and helps to ensure companies continue to exist into the future and don't bleed out. Defunct companies can't employ anyone.
A meme: that times are tough and firing people will free up capital.
It's a meme my boy. people are losing their jobs cause CEOs need to "make tough decisions".
They're not doing business evaluations. They're following the herd. A meme.
Feel free to remind me if they go into bankruptcy
That don't stop your decisions from being arbitrary and just following the herd.
That said, voting shareholders could replace management if they deemed them to act differently than they think the next best candidate could. So there is some risk in deciding not to try and maximize the short or long (depending on voters) value of the company.
This helps to explain why the index giants like Vanguard are getting away with pushing their nonsense ESG on companies.
Something is fundamentally broken.
They aren't running a charity for jobs program.
https://www.crn.com/news/cloud/digitalocean-layoffs-engineer...