Tuesday, June 26, 2012

What does a company owe to shareholders?

Who remembers the novel Catch 22?  Remember when M&M Enterprises bombed the base?  It was OK because "everyone has a share".  This is the situation we find ourselves in today.


You work for Behemoth Industry Inc, a Fortune 500 company, and you are also a shareholder.  Every paycheck a small amount of money is deducted for the Employee Stock Purchase program.  You also have automatic dividend reinvestment, so every quarter you are watching the number of shares you own grow, helping to build your retirement nest egg.


One Monday morning you come to work and find there is a chain on the front gate, the plant is closed.  You are now unemployed.  A company press release announces that the quarterly dividend will increase one half cent because of their cost saving measures of shipping much of their manufacturing offshore.


You are one of thousands out of work, and the ripple effect hits your town, your county, your state.  Many of those who's lives have been damaged are stockholders also, as they own shares via their 401K's, in mutual funds, and direct investments in their IRA accounts.  All these people get one half cent per share extra per quarter, in exchange for being thrown into poverty.


I am not saying I have an answer here, only that we are a shareholder society.  Shouldn't we as shareholders be getting better treatment?  Is that one half cent per share all that they owe us for our investment?