Chapter 8: Shareholders

Question 1

Shareholders role and rights

Answer 1

*Provide companies with equity capital and have the ownership rights
*rights to any profit to the value of the company upon sale or liquidation.

Question 2

When shareholders can exercise their rights ?

Answer 2

Annual general meetings (AGM) or Extraordinary general meetings ( EGM)

Question 3

what types of decision can be taken by shareholders

Answer 3

about appointment, remuneration or dismissal of directors

Question 4

who are the shareholders ?

Answer 4

Families
* Institutional investors (pension funds, insurance companies, mutual funds)
* Banks
* Other (private widely-held) companies
* Governments
* “Free float

Question 5

T/F: Shareholders don’t necessarily have to be real people ?

Answer 5

TRUE, they are companies specialist investment entities

Question 6

Institutionalization of shareholders

Answer 6

changed the relationship // the shareholders and the board of directors –> Exit over voice Fluid shareholder community

Question 7

Types of shareholders

Answer 7

• individual investors
• investment funds
• Activist funds
• invesmtent companies
• Venture capitalists and private equity investors
• directors
• group of companies
• family shareholders
• state as shareholders (governments)

Question 8

Proxy Advisors

Answer 8

Provides services to shareholders to vote their shares at shareholders meetings

Question 9

proxy advisors provided services like :

Answer 9

• operational support
• voting policy and guidelines development
• fact finding
• research/ analysis
• recommendations

Question 10

proxy advisory firms (US)

Answer 10

Institutional Shareholder Services (ISS)
* Glass Lewis & Co
* Egan-Jones Proxy Services
* Segal Marco Advisors
* ProxyVote Plus.

Question 11

largest proxy advisory firms globally

Answer 11

ISS and Global Lewis ( these two firms together have a 97 percent market share.)

Question 12

concerns about the proxy advisory
industry,

Answer 12

• fiduciary duty
• conflicts of interest
• resource constraints
• lack of transparency

Question 13

Proxy solicitors

Answer 13

hired by listed companies with dual proposal
identification and knowledge of shareholders
mechanisms for dialogue and engagement with institutional investors

Question 14

Shareholder activism

Answer 14

“actions taken by shareholders with the explicit
intention of influencing corporations’ policies and practices

Question 15

Well know activist investors

Answer 15

• Carl Icahn
• Bill Akcman
• Nelson peltz