E-Portfolio 9

Alexis Pearson

Shareholder law at first glance seems to give a lot of power to the shareholders. However,
there are ways to mitigate their involvement and powers through the articles of incorporation.
Directors and officers can be granted extensive power through the articles of incorporation and
bylaws, which diminishes the shareholder power. Shareholders are the owners of the corporation,
but actually have very little corporate control. This puts more risk on the shareholder because
they do not have a lot of say in what the corporation does, other than issues that they can vote on
(which is limited). This however, could be good for the corporation. Shareholders invested in the
company to make a profit. If much power was given to the shareholders, it would be
questionable if they would use it to make changes in the best interest of the corporation (as one
would hope) or in the best interests of themselves to receive higher dividends (which is expected
based on their little rights).
It seems like with shareholder activism, there are so many political mind games going on
which keep shareholders from truly making the change that they want to see. However,
shareholders true status in the corporation is to make money. They invest money to receive
money, and while they can recommend actions for the corporation, inherently in corporation law
they do not have a lot of power. Shareholder activism is important, and is trying to amplify the
shareholder’s role in the company. However, that role is already limited, so I do not think (and
based on in class examples) that shareholder activism is truly going to be able to make all that
much of a difference.
In large companies where one or only a few shareholders hold a large percentage of
shares, it is difficult for anything to happen because the minority shareholders cannot accumulate
enough votes to make a change. This creates a wealth disparity between who can afford to
influence change and those who simply to not have the capital to put into the business. This
leaves the ability to make change almost solely in the hands of the wealthy. Additionally, if you
look at a majority of past corporate financers (such as the ones from Something Ventured), they
are mostly white men, with very few women and people of color. These minority groups are
traditionally not as involved or able to invest enough into a corporation to make a difference.
Historically, and I would argue still presently, marginalized groups are excluded from corporate
engagement.