{"id":46,"date":"2018-06-25T11:07:05","date_gmt":"2018-06-25T11:07:05","guid":{"rendered":"https:\/\/epiksolution.org\/startup-company\/blog\/?p=46"},"modified":"2019-08-13T05:35:44","modified_gmt":"2019-08-13T05:35:44","slug":"how-much-power-do-stockholders-have","status":"publish","type":"post","link":"https:\/\/www.startupcompanycounsel.com\/blog\/how-much-power-do-stockholders-have\/","title":{"rendered":"How Much Power Do Stockholders Have?"},"content":{"rendered":"

The Electoral College: Stockholders Edition\u00a0<\/strong><\/p>\n

If I were to ask you whether any other system in America aside from its political election system uses an electoral college type system, you would probably say no. You might be surprised to find out that this isn\u2019t exactly the case. The vast majority of those who hold stock participate in an electoral college type system every time they vote for the board of directors. The question then becomes \u2013 if that is the case, how much power do I really have as a stockholder?\u00a0 Please note that the information below deals with publicly traded companies.<\/p>\n

You\u2019ll Have Minimal Say on What Goes On, On a Daily Basis<\/strong><\/p>\n

When you buy a stock, you do so from a corporation that allows members of the public to purchase shares of its stock, which, in turn, makes you a part owner of the company. Chances are, you are only buying a small portion of the overall stock that a company has to offer. This means that you have little to no say about what occurs on a daily basis. However, you do have the power to try to make sure that those who are running the company have your stamp of approval. This is because you do have the right to have a say regarding who your board of directors will be.<\/p>\n

Why Should I Care About Who is On My Board of Directors?<\/strong><\/p>\n

The Board of Directors will have a major say in how the corporation you have invested in should operate daily. As a stockholder, you have the right to vote on who you would like to sit on the board of directors. Since the people on the board are the ones who make the major business decisions, you should care about who these people are.\u00a0 The board in their collective wisdom or lack thereof will hire a CEO who will be charged with the task of running the company.<\/p>\n

Do All Those Who Have Stock Have this Right?<\/strong><\/p>\n

It depends, look to your stockholder agreement to see what voting powers you have and when they will kick in. Sometimes, if you have at least a 3 %\u00a0stock ownership for at least three years, you will have the right to have a say on whom you would like to have on your board. Of course, the rule of three is only a rule of thumb as many companies allow you to vote on whom you want on the board after your first year as a stockholder.<\/p>\n

What if I Disagree with the Boards\u2019 Decisions?<\/strong><\/p>\n

The answer to the question above depends on several things mainly, whether the decision being made is of critical importance or is run of the mill. Major decisions that you may have a say include:<\/p>\n