My beginner’s understanding of corporate law is that the officers of a publicly traded company are legally obligated to pursue a return for their investors. There seem to be nuances to this idea that I’m not aware of, and maybe someone here can clear the air in a way that will explain the amazing disparity between these two examples:
#1: GM is currently being raked over the coals for their decision not to spent, what, 50-60 cents per vehicle, to install a better ignition lock. Over the course of a few hundred thousand vehicles, this may have saved a few hundred thousand dollars, but lives have been lost as a result, GM will likely lose customers, and they will also likely lose a few lawsuits.
#2: Tesla Motors recently announced that henceforth, the battery packs on all Model S vehicles would be equipped with a new and improved array of titanium an aluminum armor to prevent penetrations by roadway debris. Never mind that this already was the safest vehicle out there, they are spending money to make it even safer. On top of that, they have declared that any owner of a Model S made before this production change could have the new armor fitted to their battery pack at no charge. Surely this costs more than 50-60 cents per vehicle.
So what gives? Does corporate law make a distinction between short-term profits (which GM appears to be pursuing by minimizing immediate costs at the possible expense of long-term losses) and long-term profitability (which Tesla appears to be pursuing by spending money now to ensure that customers don’t ever feel like Tesla is trying to screw them over)?