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There's plenty of bad decisions that a majority of shareholders can make, that a minority of the shareholders would be against, and which would decrease the val

There's plenty of bad decisions that a majority of shareholders can make, that a minority of the shareholders would be against, and which would decrease the value of the shares. But the whole points of shares in the first place is that one share is one vote, and if you want a larger say in the running of the company, you have to put up they money. One risk when investing in a public company is every other shareholder, and in this case a majority of the shareholders voted to agree to the buyout price. Tough cookie for the minority holders who opposed it, but why shouldn't they bend to the will of the majority? Why should they be rewarded after the fact? The precedence seems terrible to me, because as a shareholder in a future case like this, it is clearly beneficial to accept whatever buyout offer is on the table, and the immediately class-action sue the buyer for the difference between that and some fictional "fair" price. What happens if every shareholder does this?

ScottBurson 10y ago
If every shareholder does it, the deal doesn't go through in the first place. The court requires a shareholder to have voted against the deal in order to be a party to the lawsuit.
- JoshuaDavid 10y ago
  That seems like it sets up a perverse incentive structure, where shareholders should always vote against deals as long as the downside from the chance that their vote causes the deal not to go through is smaller than the upside from the amount they'd expect to gain from the lawsuit.
  - zaroth 10y ago
    It's amusing that several of the issues raised in the recent security analysis of "TheDAO" raised exactly the same issue with their voting structure on Proposals. Namely, game theory showed the best move was to always vote No so long as the No vote wasn't the deciding factor in killing the proposal.
  - gohrt 10y ago
    Yes. Many buyouts are immediately followed by a boilerplate class-action lawsuit that the terms were unfair. It's effectively protection-money, as the law firms who specialize in these actions settle in a predictable way, and class action means no shareholder can file a separate lawsuit in re the merger terms.
- shkkmo 10y ago
  And this is the comment that makes the whole thing make sense, sort of, to me. But then if judge's logic becomes the standard, then doesn't that mean you should always vote against the the deal if you think most people will vote for it?

ScottBurson 10y ago

If every shareholder does it, the deal doesn't go through in the first place. The court requires a shareholder to have voted against the deal in order to be a party to the lawsuit.

JoshuaDavid 10y ago
That seems like it sets up a perverse incentive structure, where shareholders should always vote against deals as long as the downside from the chance that their vote causes the deal not to go through is smaller than the upside from the amount they'd expect to gain from the lawsuit.
- zaroth 10y ago
  It's amusing that several of the issues raised in the recent security analysis of "TheDAO" raised exactly the same issue with their voting structure on Proposals. Namely, game theory showed the best move was to always vote No so long as the No vote wasn't the deciding factor in killing the proposal.
- gohrt 10y ago
  Yes. Many buyouts are immediately followed by a boilerplate class-action lawsuit that the terms were unfair. It's effectively protection-money, as the law firms who specialize in these actions settle in a predictable way, and class action means no shareholder can file a separate lawsuit in re the merger terms.
shkkmo 10y ago
And this is the comment that makes the whole thing make sense, sort of, to me. But then if judge's logic becomes the standard, then doesn't that mean you should always vote against the the deal if you think most people will vote for it?