Posts Tagged ‘shareholder’

A Reverse Stock Split is…

Thursday, May 19th, 2011

A reverse stock split is when a company adjusts the number of shares they have available to artificially increase the price per share. Technically, the shareholders don’t lose or gain any money when this happens, but the company buys itself some time to rebound from an economic drop.

The easiest way to explain reverse stock splits is with an example. Let’s say you own 100 shares of Apple stock, each worth $10. (For the record, AAPL is nowhere near that cheap in real life.) Unfortunately, Apple is suddenly hit hard by the recession – nobody’s buying iThings anymore – and the price of their stock falls to $0.50.

Apple knows that if their stock price remains under $1 for 30 days, it may be delisted from the NYSE. So in order to increase the price per share, Apple asks for a 10 to 1 reverse stock split. Suddenly, instead of having 100 shares worth $0.50 each, you have 10 shares worth $5 each.

In order to get from $0.50 to $5, you have to multiply $0.50 by 10. Imagine smooshing 10 of your $0.50 shares into one big ball of shares. Instead of 10, you now have one. And that one is worth $5.

You haven’t lost a penny. But Apple has just saved itself from being delisted.

Proxy Voting is…

Wednesday, October 6th, 2010

Proxy 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.

The SEC Boosts Investors’ Influence Over Management

Friday, July 30th, 2010

In the lopsided world of shareholder voting, investors have to posses incredible gumption to effect any kind of change within a company.

  • In most companies, the management owns the majority of the stock, meaning that shareholders have little influence in a company’s policies.
  • The Securities and Exchange Commission is trying to even the playing field for shareholders, making it easier for them to effect change within a company.
  • The SEC is imposing nonproxy measures – like electronic surveys – to gauge whether or not investors support management. And yet, despite these efforts, because of money and knowledge, the management still wields most of the power.

Best Quote

“Time and again, we have brought opportunities [for mergers or acquisitions] to the attention of the board. Each time, he says, the suggestion was rebuffed or ignored. It’s been a decade of complete nonaction.” – Shareholder, Cadus Corportation

A Stockholder is…

Tuesday, August 18th, 2009

A stockholder is another name for a shareholder or a stakeholder. It’s a person who owns shares of a company’s stock.

A Shareholder is…

Monday, August 10th, 2009

A shareholder is a person, company, or organization that owns stock in a company.

How do shareholders exercise power?

Thursday, July 30th, 2009

A shareholder, or someone who owns stock in a company, has some power to make decisions about what that company does. The primary way in which a shareholder has power is by voting in the annual meeting. Usually you get one vote per share, unless you have special shares that come with extra votes or other perks – the more shares you own, the more power you wield.

If you can’t physically make it to the meeting you can send in a proxy vote. Some time before the meeting, the company should send each shareholder a packet with information on how to do this.

All the information you need to make an informed vote is made available in the annual report sent to shareholders. You can empower yourself and your dollars by staying informed and using your vote as a shareholder.

A Voting Share is…

Wednesday, July 29th, 2009

A voting share is a portion of a company that you own (a share) that gives you the right to vote on major business decisions for the company. As a shareholder, you can go to the annual meeting (or vote via proxy) on important issues such as corporate policy and who serves on the board of directors.