Common stock shareholders of a public company have certain rights relating to their equity investment, and among the most important of them is the right to vote on certain corporate law issues. Shareholders usually have voting rights in elections to the Board of Directors and on the proposed operational changes, such as changes in corporate goals or major structural changes.
Shareholders also have the right to vote on issues that directly affect their stock because the company makes a stock split or a proposed merger or acquisition. They can also have the right to vote on Executive compensation packages and other administrative issues.
Ordinary shares of ownership always carries the right to vote, but the nature of the rights and specific issues, shareholders have the right to vote may differ greatly from one company to another. Some companies to provide shareholders the right to one vote per share, thus giving shareholders with increased investment in the company a greater role in corporate decision-making.
In addition, each shareholder has one vote, regardless of how many company shares he or she owns. Shareholders may exercise their right to vote at the annual General meeting of the Corporation or special meeting in order to vote, or by proxy. Power of attorney is sent to shareholders together with their invitation to participate in the shareholders meeting. These forms are listed and described all matters on which shareholders are entitled to vote. The shareholder is entitled to fill out a form and send his or her vote on issues instead of voting personally.
Because the issues on which shareholders may vote, at least in part, determine the profitability of the company in the future, the right to vote in such matters to give shareholders the opportunity to influence the success of their investment. The decisions taken at the annual meeting of shareholders may be the deciding factor in whether a company’s share price subsequently doubled or reduced by 50%. Therefore, it is important for shareholders to seize the opportunity to positively influence corporate direction.
Shareholders should consider carefully the proposals that were submitted for a vote. For example, there may be proposals for the company to take action that amounts to the creation of a “poison pill” designed to thwart a possible joining another firm. While such proposals may be useful for staff, corporate management, they may not always be in the interests of shareholders, which could realise significant capital gains from shares in case of takeover. Any proposed changes in the Charter of the company should be carefully considered, as should the proposals of the management company to change the legal or accounting firms.
The proposed stock option plans or a stock split can have a significant impact on the value of existing shares, and therefore, such proposals deserve careful analysis on the part of shareholders to vote. Another element to analyze shareholder is the report of the remuneration Committee of the company. Investors should review the company’s compensation plan to determine such things as the overall reasonableness of Executive compensation packages and how to effectively bonuses tied to actual performance.