No, this is not a fan fiction post that should appear on the "adult" oriented Craigslist pages. It's a story about corporate decision-making power, and control over corporate direction. I swear, it's not as boring as it sounds.
Apparently, some investors are upset with Nintendo for not putting its marquee franchises - Mario Bros., Legend of Zelda, etc. - on the iOS platform. These investors believe that Nintendo's strategy of only developing games for its hardware platforms is a losing one, and that Nintendo should "scrap that strategy to avoid further alienating investors who have driven the stock to six-year lows." Harsh words, but Nintendo chief Satoru Iwata is not backing down. He's (for the time being) sticking with Nintendo's long-held vision of game development.
So what happens when a company's investors are unhappy with the direction of the company? Do investors have the power to change the company's direction? Technically, yes. Practically speaking, there may be some challenges to doing so. Let's briefly explore two of those ways: proxy fights and shareholder derivative lawsuits
Ed. Note: this is not meant to be a full exploration of these two strategies, as these are highly complex bodies of law; rather, as a video game blawg, we'll stick to what our readers will find of most interest - the impact on the games industry.
First, the investors could launch a proxy fight, which is a fancy way of saying "we're going to replace enough directors to take control of the board, which will then fire the current senior management and install new managers from receptive to our point of view." This is a strategy sometimes employed by investor Carl Icahn, which some notable success. Of course, proxy fights can be (very) expensive, time-consuming, and not at all guaranteed to work.
Second, the investors could file a shareholder derivative suit against the company. Again, this is a fancy legal way of saying "we're suing the company because it screwed up and as a result we, the investors, lost money." The lawsuit attempts to recover some of that money, which is paid to the investors (with a good chunk of that often going to the attorneys representing the plaintiff investors). This can be a "cut off your nose to spite your face" solution because at the end of the day, the money all comes from the same place (the company). However, it can get your point across to senior management.
So, what does this mean for Nintendo? Leaving aside the question of proxy fights (which are fickle things, and the indicators of such a fight looming aren't quite there right now), I don't think that a shareholder derivative suit is in the works. Based on what we currently know, a lawsuit based on this would have to contend that Nintendo's choice of abstaining from the iOS platform was somehow unsound under corporate law. But this type of decision - to tap into a particular platform or not - is a business judgment. In the context of corporate law, these types of business judgments do not generally give rise to derivative lawsuits unless the judgment involves fraud, illegality, a conflict of interest, or a clear dereliction of managerial responsibilities.
This rule - aptly named the Business Judgment Rule - is articluted in any number of cases, but one in particular strikes me as being very similar: Shlensky v. Wrigley (PDF). In 1968, the Chicago Cubs were sued by shareholders of the Wrigley Corporation because the Cubs refused to play baseball games at night. The shareholders argued that if the Cubs installed lights and played night games, more people would come, which would mean more revenue from ticket sales, concessions, etc. By failing to take these measures to maximize potential corporate profit, the shareholders felt that the corporation had been mismanaged.
Ultimately, the Cubs won the lawsuit because management's decision not to schedule night games involved no fraud, illegality, or conflict of interest, and they articulated reasons why the decision was not complete mismanagement.
Here, the facts (as we currently understand them) are very similar. Nintendo has long held to the belief that it develops games for its hardware, not for everyone else's. This strategy is in place to benefit the company's hardware sales because having exclusive titles can work out well for platforms (I know a few people who bought an Xbox 360 because they wanted to Halo). Thus, unless some "bad fact" comes up (fraud, illegality, etc.), I don't expect the decision to abstain from the iOS platform as being deemed mismanagement sufficient to overcome the business judgment rule.
What does this mean for companies other than Nintendo? Here's my two cents: when making strategic decisions that impact business opportunities (exclusivity, abstention from a particular platform, long-term partnering, etc.), make sure you have some legitimate business reasons as to why that decision is, in your opinion, a good one. Do not, under any circumstances, go with reasons like "because this was my cousin's company," or "because they paid me a finder's fee." Having solid, legitimate reasons as to why the company you manage will benefit from your decision.