If a business returns value to the shareholders, then it has performed it fiduciary responsibility. Whether or not jobs were lost or created is not material. The investors are the risk takers and are deserving of rewarding if the business improves. They're the ones who put it all on the line.
As much as I despise Myth Romney, neither he nor Bain are job killers. The labor unions are and minimum wage are at fault. They stand in opposition to individual liberty and freedom.
I really agree with you on principle. That said, I don’t have a lot of respect for the electorate of this country. If this meme goes viral (which I’m certain it will if he gets the nomination), Romney will be poison to most voters.
Good post........
Well, you know for venture capital what you say is exactly true. However, for the type of transactions that are controversial, Romney/Bain merged management consulting with a leveraged buyout model. They joined the management and Board of the acquired companies.
Therefore they had a fiduciary responsibility to the acquired company's shareholders too, since they were members of that board. They were serving 2 masters. How well they did it has certainly been challenged in some cases.
Even Romney said, “great care has to be taken not to take a dividend or distribution from a company that puts that company at risk”. Whether his judgment was mistaken in some cases, and too much was taken out is a legitimate question to examine.
Bain did NOT put it all on the line, but they were in a position to hurt the acquired company's shareholders. The Bain model allows them to put up small amounts of their own money, pile up huge debts to leave with the company, while using the proceeds from the loans to pay huge dividends and management fees to Bain.
The executive compensation package is often structured so that going along with shortsighted decisions is personally enriching, which is just dandy, because their are no dishonest people or people who might be tempted among capitalists, Right?
If all the parties are 100% honest and not greedy, both companies shareholders interests are met in a balanced way. However, there is no built in mechanism to check abuse of power that would exist such as would exist if a business owner for example, hired a consultant.