What Are Voting Shares?
Let me explain what voting shares are: they're the shares that give you, as a stockholder, the right to vote on matters of corporate policymaking. In most cases, a company's common stock is what represents these voting shares. But keep in mind, different classes like preferred stock often don't come with voting rights.
Key Takeaways
You need to know that voting shares give you a say in how a company’s corporate policy is shaped, right down to electing the board of directors. They also let you approve or reject big moves like mergers. Companies can issue various classes of shares—some with voting rights, others without. Think of Google and Berkshire Hathaway as prime examples; they offer both voting and non-voting stock.
How Voting Shares Work
If you hold voting shares, you get to weigh in on decisions about the company’s future direction. For example, if there's an acquisition offer from another company or investors, you can cast your vote on it. As a shareholder with voting shares, you'll typically receive regular updates from the company on matters needing a vote. Deciding to vote or not doesn't directly impact your ownership or the shares' value, but the outcomes of those votes might affect the company's market value down the line.
Special Considerations
It's common for activist investors to push you and other voting share owners to vote in favor of actions they want the company to take. In hostile takeover bids, potential buyers might campaign directly to you, the voting shareholders, to build support for changing the company's direction. This could mean ousting the current board and even replacing executive officers. If the board agrees to sell the company, the approval process requires a vote from those of you with voting shares, and you could reject the offer if it doesn't match your valuation of the company.
Types of Voting Shares
Depending on the shares issued, you might have different levels of voting power as a shareholder. A company could reserve a special class for founders, upper management, and early employees, giving them multiple votes per share. They might also issue standard voting shares with one vote each, or even shares with no voting power at all. This setup gives certain stakeholders more individual influence over the organization's decisions. These different types can also have varying market values, especially during events like stock splits.
Example of Voting Shares
Take Google as a key example—it's one of the most notable with multiple share classes. Shares under GOOGL are Class A with voting rights, while GOOG are Class C without them. There's also non-traded Class B shares held by insiders, each counting as 10 votes. Similarly, Warren Buffett’s Berkshire Hathaway has Class A shares (BRK.A) with voting rights, and Class B shares that cost much less but give you almost no say in running the company.
