Dodge v. Ford Motor Co. (Ford duty, 1919)
Legal Issues
BrynoDC Coverage 1 video
The Issue
Whether corporate directors have a fiduciary duty to maximize shareholder profits and distribute earnings as dividends, or may subordinate shareholder returns to other corporate purposes such as employee welfare and community benefit.
Whether a court may enjoin corporate dividend decisions when directors act from charitable motives rather than shareholder profit maximization.
The Rules
The business of the corporation is to make money for its stockholders. Directors cannot use corporate funds for charitable, philanthropic, or altruistic purposes if doing so reduces shareholder profits. Directors owe a fiduciary duty to act in the best interests of the corporation and its shareholders, which means maximizing profits.
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