Shareholder activism is when a shareholder of a publicly-traded company uses their rights to pressure that company to make change. Basically, it’s a way that shareholders can influence and change a company’s behavior in a certain way. For example, shareholders may influence a company to become more environmentally friendly or disinvest from a country with a record of human rights abuses. Shareholder activism can take the form of voting for or against certain corporate actions or members of management, and/or in organizing groups of voters to block or force a corporate action.
Archive for the ‘Daily Definition’ Category
Proxy Voting is…
Wednesday, October 6th, 2010Proxy voting is when someone casts a vote for someone else. If you are a shareholder in a company, you are allowed to vote on certain general decisions made about the company. If you are unable to attend the meeting where the voting takes place, then you might ask someone to be your proxy and submit your vote on your behalf.
Net Profit is…
Wednesday, October 6th, 2010Net profit is the amount a company makes (or loses) after taking its expenses into account. You can figure out net profit easily by subtracting a company’s total expenses from its total revenue. For example, if Company X has a total revenue of $1,000 in May, but spent $500 to produce the revenue, the net profit would be $500.
A Liability is…
Wednesday, October 6th, 2010A liability is anything that an individual or organization owes to someone else. Liabilities can be salaries owed to employees, dividends owed to shareholders, taxes owed to the government, fixed or long-term debt such as bonds (which must be repaid with interest to the holder) or bank loans (which must be repaid with interest to the bank). Liabilities are the opposite of assets.
A 401(k) is…
Wednesday, October 6th, 2010A 401(k) is a retirement account that you don’t have to pay taxes on right away (the technical term is “tax-deferred”). These accounts are generally sponsored by employers, who can use them as a substitute for a traditional pension plan. Unlike a pension plan, which is managed and paid for entirely by the employer, a 401(k) acts as a personal retirement plan. Employees can contribute up to 15% of their salary every year (but no more than $11,000 a year for people under 50, and $12,00 for people over 50), which will not be taxed until they withdraw the money.
The interest, investment earnings and employer contributions (the employer can decide to pitch in to the account, if they want) are also not taxed until the employee withdraws the money. If the money is withdrawn before retirement age (currently 59.5 years old), the account holder faces an early withdrawal penalty fee.