A 3 page paper. The role of shareholders is described as having control of the company's activities. The one activity that supports this role is the election of board directors. This paper discusses this issue and reports recent proposals by the SEC that will require corporations to be more transparent. The writer comments on the difference between large shareholders and small shareholders. Bibliography lists 5 sources.
Name of Research Paper File: ME12_PGshcgv9.rtf
Unformatted Sample Text from the Research Paper:
the fact that they get one vote per share. Obviously, the largest shareholders in any corporation would have more power than the smallest shareholders. Boatright (2001) explained it this way:
"the law assigns a central role to shareholders . . . . [They] have the ultimate right of control as well as a claim on all profits." One of
the responsibilities of shareholders is to elect board members. Allegedly, the Board controls the company but we all know this is not what really happens. A Board may fire and
hire the CE0 and/or President, but they really do not control what happens in and with the company. In turn, shareholders elect Board members but with so many small investors
today, many of them do not really understand the protocols and documents the corporation mails or e-mails to them. This makes it very difficult for the average small investor to
have any influence into the governance of the company. The Securities and Exchange Commission (SEC) has approached this issue and in July 2009, proposing three measure that are intended to
give shareholders more power (SEC, 2009). The measures have multiple purposes that include instilling more confidence in investors (SEC, 2009). The first measure addressed TARP (Troubled Asset Relief Program) monies
and executive pay. This measure requires companies to place before its shareholders any executive compensation packages in an effort for transparency as well as to curb these excesses (SEC, 2009).
The second proposed measure is about proxy disclosures and solicitations (SEC, 2009). These, also, bring into the light executive pay by requiring corporations to publicize the qualifications of executive officers
as well as board directors and "the relationship of a companys overall compensation policies to risk" (SEC, 2009). This would include the stock options and other perks given to these