Company law and governance exist for one purpose: to expand and protect shareholder income and power. This chapter explores some of the implications of this and some of the resulting paradoxes. A core paradox is that by promoting shareholder value, company law and modern corporate governance simultaneously and necessarily promote the interests of company executives whose own fortunes are bound to that value. However, while achieving shareholder value is considered a success, and a rising Financial Times Stock Exchange (FTSE) a marker of economic good health, high executive pay is considered a modern-day scandal, a societal blight. Other curiosities include the considerable scholarship that links shareholder value-driven corporate activity to societal problems such as inequality, or lack of investment in innovation and productivity, but that simultaneously clears shareholders of culpability. Executives, not shareholders, are to blame. Indeed, shareholders and other claimants on corporate profit are thought to be part of the solution to shareholder value-driven corporate activity. They are entrusted with increasing monitoring responsibilities and with control of key corporate governance mechanisms, manifest in such developments as shareholder say on pay, the Stewardship Codes and the Shareholder Rights Directives. That these contradictions can co-exist evidences the considerable debate, not to mention confusion, in company law and governance around shareholders, directors and their varying duties and entitlements.
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- Shareholders and Directors: Entitlements, Duties and the Expansion of Shareholder Wealth
- Macmillan Education UK
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- Chapter 7