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Will I eventually own 100% of the shares if my stock keeps on splitting?

Personal Finance & Money Asked by kingrulezzz on October 16, 2020

I want to become a board director and in this question How do I get a seat on the board of directors? people told me that I need lots of shares to be seriously considered for the job.

I will need lots of shares, so my strategy is to find stocks that are serial-splitters, those that split many times. If my stock splits, I will have more shares. If I buy a few shares right now, they will split many times, and I will have lots of shares after some time, enough to get a board seat. Then, I can call the CEO to demand a board seat.

Will I eventually own 100% of the shares using this strategy? How long do I have to wait before I can realistically get a board seat using this strategy?

2 Answers

A share split increases every owner's number of shares equally. If you own 35% of the stock before a split, you will own 35% of the stock after a split, because every share (whether owned by you or someone else) splits.

Answered by chepner on October 16, 2020

I think there's a misunderstanding. Getting a seat on the board doesn't require "lots of shares" [in absolute numbers]. It requires "a large(ish) percentage of the voting shares".

That is, board members are selected by vote. If you have enough votes, you can vote yourself a seat on the board (or vote other board members off). Usually, no one has enough to do this unilaterally (more than 50% of the voting shares). Instead, investors with large percentages (5% or 10%, frequently) are selected because they have a large vested interest in the company and want to ensure that it is run correctly and in the direction that they prefer. At some interval, usually annually, all voting shareholders can participate in an election to choose the board (and do other things, sometimes). Since most investors will not attend, they assign their votes by "proxy" and someone else casts that vote in their place - which will almost always be for someone pre-selected by those with (relatively) large fractions of the ownership. In hotly-contested elections, getting enough of those non-attending shareholders can be a big deal, and this gives rise to the term "proxy fight", where competing factions are vying to be assigned proxy for enough of the minor shareholders.

Sometimes non-voting shares will also be granted board seats, but this is typically outside the regular channels.

Answered by Istanari on October 16, 2020

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