The decision followed a New York Times report this month that G.M. had, for years, been sharing data about drivers’ mileage, braking, acceleration and speed with the insurance industry. The drivers were enrolled — some unknowingly, they said — in OnStar Smart Driver, a feature in G.M.’s internet-connected cars that collected data about how the car had been driven and promised feedback and digital badges for good driving.
If the article link contains a paywall, you can consider reading this alternative article instead: ‘GM Stops Sharing Driver Data With Brokers Amid Backlash’ on Ars Technica.
That’s not true.
It’s not? I’m open to learning if what I’ve been told is wrong.
There’s a fiduciary duty to the shareholders, but a fiduciary duty doesn’t mean that you’re obligated to maximize profit at all costs. It just means that you’re obligated to act in the interest of your shareholders.
If the board or officers use their position to push for a contract that benefits some other interest they hold at the expense of the company, that’s a breach of fiduciary duty. Simply preserving the value of the company over short term gains, having a different approach to risk, or other good faith behavior don’t violate fiduciary duty.
Thank you! I didn’t realize it was more nuanced than that. I thought simply they were charged with maximizing profit. It doesn’t seem to be an actual requirement to do so.
Fiduciary duty as a search term should get you a lot more information.
The “short term profit” argument is one certain types of investors like to push, but it’s not really supported by anything and it’s very often not actually in the interest of the majority of shareholders.
For the vast majority of the shareholders, profit maximization is the end goal. Nothing else matters.
Fiduciary duty does not require you do what they want. If the majority of stock holders don’t like your management, they can replace you. Fiduciary duty basically just means that you have to act in good faith.
But your assertion also isn’t true. Most shareholders are long term shareholders who want stable growth, not the short term spikes followed by hard crashes that are the result of forcibly extracting profit without paying appropriate attention to long term sustainability.
Apologies if my tone came off jarring. Shareholder value creation being the default position has left me a bit bitter towards the ideas of there being any actual effective corporate governance that doesn’t just favor those at the very top.
You were fine. There’s definitely enough with influence to push that agenda, and it warrants bitterness.
I’m only correcting it in the hopes that people recognize the groups pushing for that are full of shit and just trying to extract value and leave normal shareholders holding the bag.