Shareholders?
The shareholders are near the very bottom of the list to get anything when a company goes belly-up. (The shareholders of SVB have file a lawsuit against the CEO and the parent company of SVB.)
Tiffin announces another round of production layoffs
- Thread starter Gary RV_Wizard
- Start date
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If you have answers, please help by responding to the unanswered posts.
The shareholders are near the very bottom of the list to get anything when a company goes belly-up. (The shareholders of SVB have file a lawsuit against the CEO and the parent company of SVB.)
They're suing because they were blind sided and couldn't take their money and run before the banks depositors were left holding the bag. The shareholders elected the board of directors who appointed the executives who presided over the failure. There''s no law against incompetence and were just one of the shareholder's forewarned, someone, unless they're in congress or Texas Att'y General, would be in serious difficulty.
Pedro Dog
Well-known member
As an owner of stocks, I can tell you that shareholders have very little to do with the board of directors. There are many kids of shares with privileges that are reserved for insiders with voting rights that trump common shares. Majority shareholders, company insiders, venture funds, big investors, etc, get their folks on the boards and make all decisions.
When a company goes under, the debt is restructured and common shareholders get shafted, I know, we lost $50k when Lehman went under.
When a company goes under, the debt is restructured and common shareholders get shafted, I know, we lost $50k when Lehman went under.
Larry N.
Well-known member
How true! GM and Lucent are another couple of examples.
If you own common stock and you didn't vote for the directors of the company issuing the stock it's not because the oppurtunity wasn't there, it's because you didn't. Same in many cases with mergers, splits and acquisitions. Otherwise the point was Tiffin like other corporations are shareholder owned and shareholders aren't typically in it for the long haul, the minute those dividends stop flowing is the minute they cut their losses and move on, it's therefore in the self interest of company gatekeepers to keep the shareholders happy. It's not in their self interest to look out for the long term prospects of the company and it's employees, things go south like they did at SVB or back in the collapse of '07-'08 the executives who presided over the failure cash out and move on. There's not one banker, trader, etc. who in building the house of cards which fell when the music stopped in '07-'08 that didn't know they were playing with fire. There's likewise, not one of them, who suffered anything more than a grilling before a panel in a session of congressional Kabuki Theater.
Gary RV_Wizard
Site Team
I think a lot of small shareholders don't bother to vote because they feel sure they are outgunned by the mega-shareholders, e.g. pension funds & venture capitalists, or by lenders who received a seat on the board as a condition of the loan. I also think the boards do look out for shareholders, but it's not the little guys. Instead it's whatever their major investors want, which isn't necessarily optimum for the company itself.
I think you're 100% spot on.
Babe2201
Well-known member
It is not just in this industry. There are several reasons why it is happening but discussing them would be breaking forum rules.
They're suing because the CEO is alleged to have given misleading information as to the true financial situation the company was in.
Stockholders don't "take the money and run"... they may sell it to others who then become the stockholders, all based on the free will of the sellers and the buyers at the market price. This is all based the assumption that public information about the company is reliable. The executives of the company are required to give honest information about the company in the required SEC filings, etc.
Executives misleading the public through statements and SEC filings is illegal. Giving non-public ("insider") information to select shareholders to allow them to "take the money and run" is illegal, as is actual insider trading using this information (as the CEO at least gives the appearance of having done).
I'm shocked, SHOCKED I tell you, to learn that the major owners of a company get to decide what the company does. Just SHOCKED!
The penalty for not abiding by those proscriptions is, with a few isolated exceptions, a fine, which as was pointed out on the Daily Show 15 years ago, a fine consisting of a % of the money made in the illegal venture, what Jon Stewart referred to as "The gov'ts cut". If you made a billion dollars swindling bank depositors, loan and mortgage holders, or investors, the SEC fines you 100 million and you come away thouroughly chastened, sincerely apologetic and shocked that this widespead behavior was taking place, and oh yeah, 900 million to the good,........oh my! how did that happen? I won't mention any names and I would never point out Wells Fargo as an example.
Not sure who if anyone's objected to shareholders electing the boards of company's in which they have fiduciary interests. However if you keep snakes don't be shocked when you get bitten.I'm shocked, SHOCKED I tell you, to learn that the major owners of a company get to decide what the company does. Just SHOCKED!
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garyb1st
Well-known member
The old saying power tends to corrupt and absolute power corrupts absolutely is still true. Then there is the Peter Principle. Workers are promoted to their level of incompetence where they remain until they retire or get fired. That was true at the Fortune 100 Company I worked at for more than 20 years and two of the three largest insurance brokers where I worked for another 5 years. The level of incompetence and questionable practices IMHO unbelievable.
Based on my limited experience working for those 3 very large corporations and having the benefit of living through more than 50 years of corporate corruption, I'd say the likelihood that a corporation executive will put the welfare of their small investors and employees before their own personal greed is about nil.
Based on my limited experience working for those 3 very large corporations and having the benefit of living through more than 50 years of corporate corruption, I'd say the likelihood that a corporation executive will put the welfare of their small investors and employees before their own personal greed is about nil.
Pedro Dog
Well-known member
Getting a little off subject here but the board is not necessarily as informed as it should be at times. Management can be very tricky at painting rosy pictures when it comes to performance metrics.
Here is a real life example I experienced, I wasn't the only one affected, others got screwed in the same way.
I was managing a multi-year project with a budget in the millions of dollars. We (all of the managers) had schedule (SPI) and financial (CPI) metrics to meet. The end of the year was coming and our division was behind meeting the "sales" metric and the division manager and his team were not meeting their targets for their performance bonus. For those of you unfamiliar with the metric, sales is what allows you to bill the customer for work performed. When you complete a task in your contract schedule, you submit the report along with an invoice and "book" the sale before the end of the year.
Many of us mid level managers were directed to perform some tasks we were not ready for and the results were a huge waste of resources and budget. We understood what was happening but, we knew that we would not be punished for future cost over runs to redo the tasks. I took a $100k hit to my budget without getting any benefit (I was already under running), others had similar hits. Management got their year end bonus and we kept our jobs for being team players.
Stockholders never know any of this stuff goes on.
Here is a real life example I experienced, I wasn't the only one affected, others got screwed in the same way.
I was managing a multi-year project with a budget in the millions of dollars. We (all of the managers) had schedule (SPI) and financial (CPI) metrics to meet. The end of the year was coming and our division was behind meeting the "sales" metric and the division manager and his team were not meeting their targets for their performance bonus. For those of you unfamiliar with the metric, sales is what allows you to bill the customer for work performed. When you complete a task in your contract schedule, you submit the report along with an invoice and "book" the sale before the end of the year.
Many of us mid level managers were directed to perform some tasks we were not ready for and the results were a huge waste of resources and budget. We understood what was happening but, we knew that we would not be punished for future cost over runs to redo the tasks. I took a $100k hit to my budget without getting any benefit (I was already under running), others had similar hits. Management got their year end bonus and we kept our jobs for being team players.
Stockholders never know any of this stuff goes on.
After the ENRON debacle, the Feds cracked down on many such shenanigans. I'm sure not all of such things went away, but I do know the company I used to work for would "ship in place" at the end of the quarter (i.e. products not quite ready to ship would "ship" anyway for reporting sales purposes). The company had to cut that out as a result of ENRON reforms.
My favorote Enron scheme was smooth operators arranging with power generating facilties to shutdown for maintenance or severely cut back operations and then brokering deals with facilities in other regions to sell MW's to the affected areas. California was their primary victim.
Gary RV_Wizard
Site Team
I hear ya! But the innocent presumption is that every board member's first duty is to do what is best for the company as a whole and not an individual shareholder. Let me give an example: An invester owns major shares in a buggy whip company and also a carriage builder. The carriage builder sees an opportunity to put engines in their carriages and become "horseless", expanding their market to this new technology. But the invester doesn't want to risk losing the market for his buggy whip company, so he "persuades" the carriage company board to stay out of the horseless carriage business, a strategy decision that ultimately destroys the value of both companies. This isn't pulp fiction - Warren Buffet does it all the time. He controls or has major shares in several big banks and insurance companies with oodles of cash to invest. Then he buys into tech or manufacturing companies that he believes have good potential but need cash to grow, and then pressures his financial companies to risk investing in them or making loans. When he is right, everybody profits, but if he is wrong the financial companies take a hit.I'm shocked, SHOCKED I tell you, to learn that the major owners of a company get to decide what the company does. Just SHOCKED!
