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proportionate to their number of shares. For example, Microsoft
Corporation (MSFT) comprises 5 billion shares of stock as of this
writing. If you own 10,000 shares of Microsoft, this means that you own
10,000/5,000,000,000 of Microsoft. In other words your share of
ownership in Microsoft would translate to .0002% of the total
company.Not much, unless of course you consider that Microsoft stock
sells for about $100, which means your shares would be worth a cool
million dollars. For your information Bill Gates owns about one billion
shares of Microsoft, which not only makes him the largest stock holder
in the company (20% ownership) but also the richest man in the world,
worth $100 billion just in Microsoft stock.
So now you may wonder how could a company with so many owners
keep its focus and operate efficiently? The answer is similar to how
democratic countries operate. Take the US as an example. I, as a US
citizen, own a piece of this country, but I don’t run the US. Instead I let
my voice be heard through the democratic process of voting. I vote for
congressional, presidential, and gubernatorial candidates based on their
agenda and their promises, and if the candidates secure majority votes
they are elected into the office and I may see some of my hopes realized
while they serve their terms.
A public company operates in a similar way, except that each share
counts as one vote. Shareholders vote for a board of directors consisting
of several (hopefully) high caliber candidates with a good sense for
running a business. The board does not usually involve itself in the day-to-day activities of the company. Instead the board of directors
appoints a CEO (Chief Executive Officer), who may also be a board
member, to run the company. So as you can see, even though it may
seem that the CEO owns the company, it is actually the shareholders (or
stockholders) who own and indirectly run the company. Of course the
more shares a stockholder has, the more influential his votes would …
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