{"id":64860,"date":"2022-04-08T22:10:00","date_gmt":"2022-04-09T02:10:00","guid":{"rendered":"https:\/\/www.shortform.com\/blog\/?p=64860"},"modified":"2022-04-19T12:37:24","modified_gmt":"2022-04-19T16:37:24","slug":"business-complacency","status":"publish","type":"post","link":"https:\/\/www.shortform.com\/blog\/business-complacency\/","title":{"rendered":"Business Complacency: Stockholder Meetings Matter"},"content":{"rendered":"\n

What happens when stockholders don’t care about anything other than making money? Why should they attend annual stockholder meetings?<\/p>\n\n\n\n

Business complacency often happens once a company has achieved success. John Brooks warns against this apathy\u2014particularly from stockholders who take little or no interest in business decisions\u2014as it can cause you to be blind to internal weaknesses and external threats.<\/p>\n\n\n\n

Keep reading to learn more about complacency on the behalf of stockholders and the importance of annual stockholder meetings.<\/p>\n\n\n\n\n\n\n\n

Stockholder Complacency in Business<\/h2>\n\n\n\n

In his discussion about business complacency, Brooks reflects on how stockholders theoretically hold the power in corporations since they can vote for the board of directors and hold them accountable. However, he notes that most stockholders have no interest in exercising this power\u2014they\u2019re largely docile as long as they receive their dividends. <\/strong>As Brooks made the rounds of stockholders\u2019 meetings in 1966, he found that only a fraction of stockholders ever attended the annual stockholder meetings and, of those who did, most raised no substantive issues with the companies\u2019 management.<\/p>\n\n\n\n

(Shortform note: Stockholders\u2019 meetings<\/a> are open to all shareholders of a company. They follow a set format and their agenda typically includes an update on the company\u2019s performance, the election of directors, and a forum where shareholders can speak up.)<\/p>\n\n\n\n

At these meetings, only a handful of \u201cprofessional stockholders\u201d took it upon themselves to be the voice of the people and ask difficult questions or object to management decisions. Unlike the average stockholder, these professional stockholders kept abreast of corporate affairs and took to the floor at the annual stockholder meetings, challenging the board on issues that they deemed important. However, some of these professionals weren\u2019t the best representatives of their fellow stockholders. For example, one woman consistently brought up irrelevant points and wore elaborate costumes, turning the meetings into a farce.<\/p>\n\n\n\n

With stockholders generally being apathetic and their self-proclaimed representatives being somewhat inadequate, the board hardly ever took stockholders\u2019 input into consideration. Thus, Brooks writes, even when stockholders wielded the power, management still made all the decisions. <\/p>\n\n\n\n

The Rise of Nonvoting Shares<\/strong>

During Brooks\u2019s time, all stockholders had voting shares, but many changes have happened since then. Since the 1980s, the NYSE has allowed companies to issue dual-class shares (and later, multi-class shares), meaning they could issue both voting and nonvoting stock<\/a>\u2014the latter stock, as the name suggests, doesn\u2019t allow stockholders to vote on company-related matters. In 2017, Snap Inc. became the first company to issue purely<\/em> non-voting shares<\/a> in its initial public offering; other technology companies followed suit. This move has been hotly debated.

Companies typically opt for purely non-voting shares so that corporate insiders (usually the founders) can retain control. Proponents of nonvoting shares argue that insiders can more aggressively pursue their vision<\/a> for the company without too much risk or pushback. However, critics contend that nonvoting shares undermine corporate governance,<\/a> leading to a lack of oversight and opening the door to possible abuses by insiders. For this reason, the S&P 500 (among others) has opted to exclude such shares from its index.<\/a><\/td><\/tr><\/tbody><\/table><\/figure>\n","protected":false},"excerpt":{"rendered":"

What happens when stockholders don’t care about anything other than making money? Why should they attend annual stockholder meetings? Business complacency often happens once a company has achieved success. John Brooks warns against this apathy\u2014particularly from stockholders who take little or no interest in business decisions\u2014as it can cause you to be blind to internal weaknesses and external threats. Keep reading to learn more about complacency on the behalf of stockholders and the importance of annual stockholder meetings.<\/p>\n","protected":false},"author":9,"featured_media":64868,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[45,79,14],"tags":[607],"class_list":["post-64860","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-entrepreneurship","category-management","tag-business-adventures","","tg-column-two"],"yoast_head":"\nBusiness Complacency: Stockholder Meetings Matter - Shortform Books<\/title>\n<meta name=\"description\" content=\"Most stockholders don't attend annual stockholder meetings. 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