It's more complicated than that. There are situations where there's a class "A" share and class "B" share where class "A" has no voting rights. So the ownership by class A means close to nothing. Then there are institutional owners, like pension funds, who vote on behalf of the people who actually put the money in the fund.
The rights of minority shareholders in public companies, like you and me, needs to be protected/regulated by law. If someone wants to pay their CEO $1B an hour they can take their company private. Otherwise what happens is that the average shareholders gets screwed (like I was for example when I held GM shares as it went bankrupt).
I understand about "dual class" share structures but that doesn't mean a shareholder has any less ownership. They may have less influence or power but not not less ownership.
Influence and ownership are somewhat orthogonal concepts in the context of a corporation.
People like you and me are protected. Both CEOs and the Board of Directors have a fiduciary duty to their shareholders - all shareholders. And breach of fiduciary duties can incur both criminal and civil penalties:
The value of a piece of a corporation stems from a claim to said corporation's future profits. If you have no influence then you may not be able to stake that claim. For example, if you don't have equal vote on whether the corporation should pay dividend out of its profit then you may never get paid.
When is the last time a CEO was on trial for share buybacks where clearly he has conflict of interest with the shareholders due to the $$$'s he makes in compensation?
Or I scratch your back you'll scratch my back kind of arrangements in boards?
And what got us here, the outrageous CEO compensation and other benefits. When a CEO is paid x100 the President of the USA you know something isn't right. Since any given company may claim they have to pay more to be competitive the only way to stop that looting is to force them by law to control those salaries.
I agree that in theory we're in a good place but in practice I think we can still make progress... Fiduciary duty apparently is insufficient.
>"The value of a piece of a corporation stems from a claim to said corporation's future profits. If you have no influence then you may not be able to stake that claim."
No, If buy the stock I have a contractual right to future profits. This is true whether I am a small individual investor or whether I personally know every member of the Board of Directors. The stock represents that claim. Influence is completely orthogonal to the legal contract that the stock represents.
Doesn't this entire discussion demonstrate it ain't so? If the company has a revenue of $1B and pays the CEO $1B then it has zero profit. So how does the contractual obligation work out here? If you don't get a say on whether the CEO gets $1B in salary then what exactly is going on here?
There are other situations like the company taking on debt, issuing more shares, bankruptcy, acquiring other companies, share buybacks, dividends. If you don't have control there are ways for the company to "steal" your share of the profits.
> The rights of minority shareholders in public companies, like you and me, needs to be protected/regulated by law.
They are - the law requires the board to act in the fiduciary interests of shareholders of public companies. If the board didn't act as such, then you would have legal standing and be within your rights to sue.
It's not so much that the law needs to do a better job protecting shareholders, and more that the legal system needs to make it easier/cheaper/more accessible for common people to assert their rights.
See my reply to bogomipz above. I think the law could do more. Fiduciary duty is hard to prove but we do have fairly common practices that fairly clearly have negative influence on shareholders. I think the law should regulate those explicitly. Back to my GM example, there was some sort of class action lawsuit I signed on to, I believe all the money went to the lawyers. The bankruptcy laws are biased against the "small" shareholders. The large shareholders typically negotiate some terms that aren't available to the "little guys". Usually because they are also bond holders or hold some convertible instruments or preferred shares. A corporation like GM can effectively erase the small shareholders, start over, while pouring millions (of government money) into the pockets of the large shareholders. That shouldn't be legal.
(Edit: GM today, which is basically the same company that went under and then got Government $$'s is now worth $50B dollars. I didn't lose that much money but what pisses me off is that the dice was clearly loaded here. 80% of GM shares are held by institutions and funds and they're laughing all the way to the bank ... well, they are the bank!).
The rights of minority shareholders in public companies, like you and me, needs to be protected/regulated by law. If someone wants to pay their CEO $1B an hour they can take their company private. Otherwise what happens is that the average shareholders gets screwed (like I was for example when I held GM shares as it went bankrupt).