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What is "control" of a corporation - 50% + 1 share, or plurality control? [vanity]
foreverfree's curiosity | 3/2/12 | foreverfree

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.

ff

1 posted on 03/02/2012 4:08:18 AM PST by foreverfree

To: foreverfree
It depends on how the corporate charter is written.

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.

2 posted on 03/02/2012 4:11:55 AM PST by Jimmy Valentine (DemocRATS - when they speak, they lie; when they are silent, they are stealing the American Dream)

To: foreverfree

True control of a corporation is determined by how many seats on the board are held by people who will back you.

3 posted on 03/02/2012 4:20:35 AM PST by SeeSharp

To: foreverfree
From a mathematical standpoint, if you have 51% control of something then all votes will result in a majority as long as you participate.

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.

4 posted on 03/02/2012 4:36:44 AM PST by WayneS (Comments now include 25% more sarcasm for no additional charge...)

To: foreverfree

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.

5 posted on 03/02/2012 4:43:17 AM PST by Ouderkirk (Democrats...the party of Slavery, Segregation, Sodomy, and Sedition)

To: foreverfree

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.

6 posted on 03/02/2012 4:45:40 AM PST by JackOfVA

To: foreverfree

The entertainment industry only hires leftists these days, good luck changing it

7 posted on 03/02/2012 6:33:05 AM PST by GeronL (The Right to Life came before the Right to Pursue Happiness)

To: foreverfree

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.

8 posted on 03/02/2012 6:37:20 AM PST by GeronL (The Right to Life came before the Right to Pursue Happiness)

Thanks, people for the lesson and enlightening me some more. ;)

ff

9 posted on 03/02/2012 7:42:35 PM PST by foreverfree

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