Where do the nominations for Boards of Directors come from?

Question

They sure don't come from the average shareholder in Dubuque who holds 106 shares of whatever stock. They derive either from the corporate executives, from other directors, or from the large, institutional shareholders--let's call ALL of those sources 'insiders'. The guy in Dubuque with 106 shares is decidedly NOT an insider, and he doesn't really own much, either, except a certain set of rights. But when the going gets tough and his little company goes in the tank, he'll find that what he 'owns' isn't much in comparison with what, gee, shall I say it?, the bondholders own.

Answer 1

It depends on what the Corporate Charter and By-Laws provide, but usually the Board of Directors itself makes nominations for vacancies or re-elections.

Answer 2

I take it you're bitter about something?

106 shares of a stock is an incredibly small percentage of that particular company. A company has tens of millions of outstanding shares.

Any shareholder can nominate someone for the Board, but it may take some number of shares before that nomination would make it to the voting floor. You can even do write in votes if you attend the convention (or mail it in, if that's allowed).

So it might take 1000 signatures for small shareholders to get the name on the official ballots, but this is no different than what it takes for a public election. In public elections (like for President), it might take 50,000 signatures to get someone on the ballot -- per state. This is no different.

It happens to be that the large shareholders have enough stock to be a voice by themselves. You would need to team up with others.

Personally, I rarely buy individual stocks. I prefer mutual funds. Diversification is important.