Shareholders
own the company, but their role in running it is deliberately a small one. When companies first began raising capital by selling shares to the public, one of the major concerns was that turning over control of a company to inexperienced and scattered owners might disrupt its operations. So the system is designed to let shareholders control the company only indirectly, through the directors they elect.
For the most part, this arrangement works smoothly. But shareholders do get into struggles over control of the company when they disagree with the company's actions or its leadership. Shareholders can express their opinion in one of two ways: by selling off their shares or by exercising their voting rights.
Who gets to vote?
Shareholders who hold common stock generally have the right to vote on directors and on specific items presented on the company proxy, or ballot. But in some companies different classes of stock have different voting rights, sometimes giving those owners greater power over decisonmaking. Holders of preferred stock, which usually pays
dividends
at a specific rate, generally don't get to vote. And, if you own shares of a
mutual fund
that owns voting stocks, the fund adviser, not you, has the right to vote.
