#even typing out this lightweight response with my thumbs makes me glad licensing exams aren't essay based lmao

[elalmadelmar]

I am!

And the short answer is, no, fiduciary duty to shareholders does not overridde the outcome of shareholder votes.

However, the framing of this question is... not quite right. The thing is, shareholders don't get a particularly open-ended ability to direct the actions of a company. Shareholders give official, binding feedback to the company through shareholder votes. These votes are on specific questions selected ahead of time by the company Board of Directors, and are typically fairly constrained in content and scope.

Plus, it isn't as though "eternal unrestrained growth" is actually legally specified as the correct objective of the fiduciary duty to shareholders. That is how the duty has been interpreted by companies in their strategic decision making, but when you see litigation based around a failure in duty to shareholders, it is typically the company having pulled some illegal clownshoes nonsense that came to light and tanked the stock price through bad publicity. Because we live in a corporate dystopia, shareholders have a much better ability to punish companies than the government does for shit like that. "You made yourselves look like idiots and it cost us, your shareholders, money, so now pay us back because your idiocy made my line go down," more or less.

With the disclaimer that I can't be assed at the moment to do a specific deep dive on this question, I can't think of any case that came to public notice where a company actually wound up in litigation for failure in duty to shareholders simply because it pursued a business strategy that did not lead to the highest possible market performance.

Overall, this is something that tends to work on less official levels than that. Companies announce quarterly fiscal results, and the movement of stock prices in the lead-up to and the immediate aftermath of these announcements is closely watched and much commented upon. Companies HATE saying anything that isn't "Yeah we just had a fucking amazing quarter and made a bazillion bucks and cut our operating costs to be a lean, mean, money-making machine and are doing everything exactly right" in these announcements. However, this also means that "Hey, we made some decisions that are costing us a lot of money right now but we think they'll pay off in the long run" is a highly disfavored message. They don't want to run the risk that people will only hear the costing us a lot of money right now part and sell out and tank the stock price. This aversion becomes a spiral, because the more companies don't wanna say that, the more of a big deal it becomes when they do, and the bigger the reaction in stock price movement, reinforcing the aversion. The 24-hour news cycle beating every single CEO fart to death as an omen of future stock moment does not help this in the slightest. So even if they are in fact making decisions that trade short-term cost for long-term gain, they are going to try and spin it as hard as they can into something that sounds positive for the right now.

So, when fiduciary duty to shareholders as the reason companies act like shortsighted idiots gets trotted out, it's less about what fiduciary duty literally demands and more about how the world of professionally predicting the financial future tends to operate in waves of hysteria and tea-leaf reading.

Question about fiduciary duty: under US law, are the officers held to not uphold their duty if the shareholders direct them to follow a course that is not eternal growth(to simplify let us say this was done by obviousr majority) and they obey?

I am not qualified to answer this question.