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Shareholder


A shareholder or stockholder is an individual or institution (including a corporation) that legally owns any part of a share of stock in a public or private corporation. Shareholders own the stock, but not the corporation itself.

Stockholders are granted special privileges depending on the class of stock. These rights may include:



  • The right to sell their shares,

  • The right to vote on the directors nominated by the board,

  • The right to nominate directors (although this is very difficult in practice because of minority protections) and propose shareholder resolutions,

  • The right to dividends if they are declared,

  • The right to purchase new shares issued by the company, and

  • The rights to what assets remain after a liquidation.

Stockholders or shareholders are considered by some to be a subset of stakeholders, which may include anyone who has a direct or indirect interest in the business entity. For example, labor, suppliers, customers, the community, etc., are typically considered stakeholders because they contribute value and/or are impacted by the corporation.

Stakeholders

Examples of interests

Government

Taxation, VAT, legislation, low unemployment, truthful reporting.

Employees

Rates of pay, job security, compensation, respect, truthful communication.

Customers

Value, quality, customer care, ethical products.

Suppliers

Providers of products and services used in the end product for the customer, equitable business opportunities.

Creditors

Credit score, new contracts, liquidity.

Community

Jobs, involvement, environmental protection, shares, truthful communication.

Trade Unions

Quality, Staff protection, jobs.

Owner(s)

Have interest of the success of his/her business.

Shareholders in the primary market who buy IPOs provide capital to corporations; however, the vast majorities of shareholders are in the secondary market and provide no capital directly to the corporation.

Therefore, contrary to popular opinion, shareholders of American public corporations are not the (1) owners of the corporation, (2) the claimants of the profit, nor (3) investors, as in the contributors of capital


Stakeholder (corporate)


A corporate stakeholder is a party that can affect or be affected by the actions of the business as a whole. The stakeholder concept was first used in a 1963 internal memorandum at the Stanford Research Institute. It defined stakeholders as "those groups without whose support the organization would cease to exist."[1] The theory was later developed and championed by R. Edward Freeman in the 1980s. Since then it has gained wide acceptance in business practice and in theorizing relating to strategic management, corporate governance, business purpose and corporate social responsibility (CSR).

Types of stakeholders


  • People who will be affected by an endeavor and can influence it but who are not directly involved with doing the work.

  • In the private sector, people who are (or might be) affected by any action taken by an organization or group. Examples are parents, children, customers, owners, employees, associates, partners, contractors, and suppliers, people that are related or located nearby. Any group or individual who can affect or who is affected by achievement of a group's objectives.

  • An individual or group with an interest in a group's or an organization's success in delivering intended results and in maintaining the viability of the group or the organization's product and/or service. Stakeholders influence programs, products, and services.

  • Any organization, governmental entity, or individual that has a stake in or may be impacted by a given approach to environmental regulation, pollution prevention, energy conservation, etc.

  • A participant in a community mobilization effort, representing a particular segment of society. School board members, environmental organizations, elected officials, chamber of commerce representatives, neighborhood advisory council members, and religious leaders are all examples of local stakeholders.

Market (or Primary) Stakeholders - usually internal stakeholders, are those that engage in economic transactions with the business. (For example stockholders, customers, suppliers, creditors, and employees)

Non-Market (or Secondary) Stakeholders - usually external stakeholders, are those who - although they do not engage in direct economic exchange with the business - are affected by or can affect its actions. (For example the general public, communities, activist groups, business support groups, and the media)

Company stakeholder mapping


A narrow mapping of a company's stakeholders might identify the following stakeholders:

  • Employees

  • Communities

  • Shareholders

  • Creditors

  • Investors

  • Government

  • Customers

A broader mapping of a company's stakeholders may also include:

  • Suppliers

  • Labor unions

  • Government regulatory agencies

  • Government legislative bodies

  • Government tax-collecting agencies

  • Industry trade groups

  • Professional associations

  • NGOs and other advocacy groups

  • Prospective employees

  • Prospective customers

  • Local communities

  • National communities

  • Public at Large (Global Community)

  • Competitors

  • Schools

  • Future generations

  • Analysts and Media

  • Alumni (Ex-employees)

  • Research centers

  • Each Person

In management


In the last decades of the 20th century, the word "stakeholder" has become more commonly used to mean a person or organization that has a legitimate interest in a project or entity. In discussing the decision-making process for institutions—including large business corporations, government agencies, and non-profit organizations -- the concept has been broadened to include everyone with an interest (or "stake") in what the entity does. This includes not only its vendors, employees, andcustomers, but even members of a community where its offices or factory may affect the local economy or environment. In this context, "stakeholder" includes not only the directors or trustees on its governing board (who are stakeholders in the traditional sense of the word) but also all persons who "paid in" the figurative stake and the persons to whom it may be "paid out" (in the sense of a "payoff" in game theory, meaning the outcome of the transaction).

Example

  • For example, in the case of a professional landlord undertaking the refurbishment of some rented housing that is occupied while the work is being carried out, key stakeholders would be the residents, neighbors (for whom the work is a nuisance), and the tenancy management team and housing maintenance team employed by the landlord. Other stakeholders would be funders and the design and construction team.

The holders of each separate kind of interest in the entity's affairs are called a constituency, so there may be a constituency of stockholders, a constituency of adjoining property owners, a constituency of banks the entity owes money to, and so on. In that usage, "constituent" is a synonym for "stakeholder."


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