Skip to comments.What is "control" of a corporation - 50% + 1 share, or plurality control? [vanity]
Posted on 03/02/2012 4:08:14 AM PST by foreverfree
This question has gnawed at my brain ever since someone stated on another board (one pertaining to the radio-TV industry) that "control" of a company consists of owning a plurality of shares, not a majority.
Can FReepers help me with this (with something other than a Wiki link)? I never took an economics course.
If you have what is called "cumulative voting" then 51% of the shares makes control. If there is no cumulative voting then a plurality holds.
True control of a corporation is determined by how many seats on the board are held by people who will back you.
If no single party/faction/individual controls 51% of the vote, then a plurality is possible on votes with more than two options. In such cases, one choice could have a higher percentage of the total votes than any of the others, while not having a majority. For instance, if there are three possible options, the vote could end up 45& to 30% to 25%.
If all that is needed is a plurality, then in this example the option which received 45% of the vote wins. On simple yes/no up/down votes, by definition there will never be a plurality. In these cases, there are three possible outcomes: ‘yes’ has a majority, ‘no’ has a majority, or there is an exact tie.
However, if one party controls 51% of the vote, then whichever option that party chooses will obviously have a majority regardless of how many options there are. In this case, the concpet of a plurality becomes moot.
That's how the math works. However, if the word ‘plurality’ has a different meaning when applied to corporate control than in mathematics, then it might not apply.
Let’s look at Lockheed Martin for example.
General Electric owns 42% of the voting shares in the company. This is the largest block of voting shares. It also has two seats on the Board of Directors. Is this defacto control? no...probably not. Do they have a strong influence on the company...absolutely. Is majority ownership required for control of a company and is it necessary for the company to do as you wish...
Control is by most charters in the hands of the board of directors. The shareholders have a voting influence, but the directors are not obligated to follow the will of the stockholders. Majority of the board is necessary.
If corporate ownership is widely dispersed, it’s possible to have working control with less than 50%. Suppose 100,000 shareholders have a total ownership of 70% of the stock with none owning more than 0.1% of the shares and one person owns the remaining 30%. That can be enough, with some reasonable inside politics, to give working control to the 30% owner.
You also have to look at how shares are related to votes. Some companies (New York Times, for example) have Class A and Class B shares, with one class having 10 times the voting power of the other. This permits control to be held by the founding family while owning only a small percentage of total shares (A plus B) issued.
The entertainment industry only hires leftists these days, good luck changing it
You know it takes one atheist with a lawyer to shut down any ‘religious’ expression in a public school?
It’s not much different at these large corporations. They ebnd over backwards to donate to and support leftwing causes because they want good PR and who controls the media? The left.
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