COMMON STOCK FEATURES

The term common stock means different things to different people, but it is usually applied
to stock that has no special preference either in receiving dividends or in bankruptcy.
Shareholder Rights The conceptual structure of the corporation assumes that shareholders
elect directors who, in turn, hire managers to carry out their directives. Shareholders,
therefore, control the corporation through the right to elect the directors. Generally,
only shareholders have this right.
Directors are elected each year at an annual meeting. Although there are exceptions
(discussed next), the general idea is “one share, one vote” (not one shareholder, one vote).
Corporate democracy is thus very different from our political democracy. With corporate
democracy, the “golden rule” prevails absolutely.3
Directors are elected at an annual shareholders’ meeting by a vote of the holders of a
majority of shares who are present and entitled to vote. However, the exact mechanism
for electing directors differs across companies. The most important difference is whether
shares must be voted cumulatively or voted straight.
To illustrate the two different voting procedures, imagine that a corporation has two
shareholders: Smith with 20 shares and Jones with 80 shares. Both want to be a director.
Jones does not want Smith to be a director, however. We assume there are a total of four
directors to be elected.
The effect of cumulative voting is to permit minority participation.4 If cumulative
voting is permitted, the total number of votes that each COMMON STOCK FEATURES
The term common stock means different things to different people, but it is usually applied
to stock that has no special preference either in receiving dividends or in bankruptcy.
Shareholder Rights The conceptual structure of the corporation assumes that shareholders
elect directors who, in turn, hire managers to carry out their directives. Shareholders,
therefore, control the corporation through the right to elect the directors. Generally,
only shareholders have this right.
Directors are elected each year at an annual meeting. Although there are exceptions
(discussed next), the general idea is “one share, one vote” (not one shareholder, one vote).
Corporate democracy is thus very different from our political democracy. With corporate
democracy, the “golden rule” prevails absolutely.3
Directors are elected at an annual shareholders’ meeting by a vote of the holders of a
majority of shares who are present and entitled to vote. However, the exact mechanism
for electing directors differs across companies. The most important difference is whether
shares must be voted cumulatively or voted straight.
To illustrate the two different voting procedures, imagine that a corporation has two
shareholders: Smith with 20 shares and Jones with 80 shares. Both want to be a director.
Jones does not want Smith to be a director, however. We assume there are a total of four
directors to be elected.
The effect of cumulative voting is to permit minority participation.4 If cumulative
voting is permitted, the total number of votes that each

Negotiators can have different goals, even multiple goals. For example, when
you negotiate the purchase of a new car, you typically focus on paying as low a
price as possible. In other negotiations, your goal may be to beat your
counterpart or to reach an agreement as quickly as possible. In yet other
negotiations, you may want to improve your relationship with your counterparts
even if that comes at some cost to your short-term interests.
It may seem obvious that negotiators should have their goal
ental

less money than the baker, and considerably less knowledge of how to accomplish it. Additionally,
unless you have a very distinct

you run the risk of becoming perplexed in your understanding of what the aim is

the negotiation's excitement. In fact, bargainers frequently forget about their

They either concentrate entirely on outpacing their opponent or their initial purpose.

rely on a hasty agreement to get out of a tight spot.

Negotiators have a penchant for obtaining agreements, as was stated in the introduction.

Despite agreements not always resulting in success, a successful

Instead of one, negotiation is one in which you obtain more of what you desire.