Management and Control of the Corporation

Kenneth Weddle
LEG 205
Strayer University
Professor John Taulane
September 2, 2015

Shareholders, as the owners of the corporation, are entitled to many legal rights. The most important goal of the corporation should be wealth appreciation for shareholders and many times this is not codified in a specific legal right (Velasco, 2006, p. 409). More often these rights need to be specified in the corporation’s incorporation documents or bylaws. Velasco (2006) describes the right to vote and elect directors and the right to sell stock as the “fundamental rights of the shareholder.” Additionally shareholders have financial rights as well which must be spelled out within the corporation’s bylaws. In a modern, publically traded corporation, it is impossible to for shareholders to set overall business policy or determine strategic direction of a corporation, much less manage the day to day operations of the corporation. Corporate statues, in all states, provide that the board of directors will manage the affairs of the corporation (Hamilton, Macey, & Moll, 2010, p. 405). One of the most important rights that a common shareholder has, as an owner of the corporation, is the right to vote for directors. Most publically traded corporations have traditional voting for directors, in where one share of stock equals one vote for each share owned for each director nominee. Cumulative voting allows for minority shareholders to elect directors. The United States Securities and Exchange Commission (2014) gives an example of cumulative voting as:
If the election is for four directors and you hold 500 shares (with one vote per share), under the regular method you could vote a maximum of 500 shares for each one candidate (giving you 2,000 votes total—500 votes per each of the four candidates). With cumulative voting, you are