Dodge v. Ford Motor Co., 204 Mich 459; 170 NW 668 (1919), is a case in which the Michigan Supreme Court held that Henry Ford had to operate the Ford Motor Company in the interests of its shareholders, rather than in a manner for the benefit of his employees or customers. It is often taught as affirming the principle of "shareholder primacy" in corporate America, although that teaching has received some criticism. At the same time, the case affirmed the business judgment rule, leaving Ford an extremely wide latitude about how to run the company.
The general legal position today (except in Delaware, the jurisdiction where over half of all U.S. public companies are domiciled and where shareholder primacy is still upheld) is that the business judgment that directors may exercise is expansive. Management decisions will not be challenged where one can point to any rational link to benefiting the corporation as a whole.
Facts
By 1916, the Ford Motor Company had accumulated a surplus of $60 million. The price of the Model T, Ford's mainstay product, had been successively cut over the years while...
LordOfTheKangs
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