eli5 why do companies with billions in the bank care about stock prices. Wouldn’t they be financially fine if the stock lost money?

Question

eli5 why do companies with billions in the bank care about stock prices. Wouldn’t they be financially fine if the stock lost money?

In: 103

Answer 1

First, company executives have a fiduciary duty (legal obligation) to serve the shareholders, so they need to make decisions on that basis.

Also, big businesses have many important employees (exceptional managers, people with specialized technical skills) who are paid in part with stock options. When your stock price is performing well, that helps you retain quality employees; if your stock price craters, it makes it much easier for competitors to poach your best workers.