More legal mumbo jumbo. This is a concept that allows shareholders and/or government agencies to bring legal action against corporate bigwigs (mainly members of the Board of Directors and C-Level execs) for wrongdoing.
If Jack & Jill are the Chairman & CEO, respectively, of publicly-traded Sherpas Unlimited, Inc. (Ticker: HIL), their fiduciary duty is to maximize profits (and, therefore, shareholder value) by executing the corporate strategy of helping clients carry their belongings to the tops of mountains. If, after a traumatic fall, they decide to no longer fulfill their duties, and knowingly hire a yodeling sherpa who consistently leads clients over the edge of mountains and into injurious situations...and HIL's stock price falls off a cliff...adverse domination would allow for Jack & Jill to be held legally liable for any financial damage done to shareholders.
Also a Fifty Shades thing but, um, we won't go there.
Related or Semi-related Video
Finance: What is non-voting stock?4 Views
finance a la shmoop- what is non-voting stock? hmm well it's stock that doesn't
vote. bet you're shocked to hear that. most people need a PhD in finance to [stock wears an "I didn't vote" sticker.
understand that notion. but really that's it in most cases common stock carries
with it the right to vote. and in fact it's the common shareholders who elect
the board of directors. but every now and then a potentially hostile investor
comes along and buys or wants to buy a big chunk of stock in a company. well the
amount might be a block large enough to elect that potentially hostile investor
slate or the group of people that investor wants to place on the board to
represent her evil intentions .when that happens companies will often create a
class of common stock similar in every way to its normal common only with its [stock checklist of privileges listed]
voting rights stripped away .that way the investor can own an economic interest in
the company but not monkey with the board.
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