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Shareholder

A shareholder is a person or entity that owns shares in a corporation, whether it be a single share or every one of the total shares outstanding. A shareholder is therefore a part owner.

Expanded Definitions

Shares are not by themselves slips of paper. Well, actually, most of us hold our shares in street name, leaving the shares at our brokers, so we never see those slips of paper. But that's beside the point. Shares, instead, are parts of a business and the shareholder is a part owner of that business. This is true whether the business is the private one run by your friend or a large public corporation.

However, in the past, some shareholders were, like the animals in Orwell's Animal Farm, more equal than others. (And even today, large shareholders still are.) But Reg FD eliminated a lot of the discrimination against small shareholders by making information publicly available to all shareholders at the same time. That, along with the growth of the internet and easy dissemination of information and the growth of individual stock ownership, has led to the marginal shareholder (you and me, unless you are running a mutual fund or something) having the same access to things like quarterly earnings conference calls and other things once reserved strictly for Wall Street.

Being a shareholder doesn't mean that you can just sit back, collect your dividend check, and watch the price of your shares rise. You also have the responsibility to vote your shares as you see fit on such things as the appointment of people to the board of directors, stock option plans, employee stock purchase plans, and hopefully someday soon, management payment. These are things which affect the running of the business which you own a part of and thus it is in your own self interest to pay attention. If you do not understand what you read in the proxy statement, which outlines things like the above to be voted on at the annual meeting, give a call to the company's investor relations department. They should be happy to answer your questions.

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