Shareholder power & coalitions

Ownership data within Orbis can now be used for a new purpose: identifying the most powerful shareholders in an organisation and showing shareholder coalitions that could be formed to control the organisation.

A shareholder's shareholder power is defined as the shareholder's a priori probability of being in a position to flip a decision in the subject company, given that he/she/it acts as an independent player. If a shareholder has a shareholder power of 100% in a company, he is in position to dictate all decisions in a General Assembly - he is in control. If he has a power of 50%, there is a 50% chance that he could have changed the outcome of a vote if he changed his mind.

The level of power given by a certain share percent is not given by the ownership percentage alone, but is highly dependent on the distribution of the other shares.

If company A is owned by shareholder B with 30% and shareholder C with 70%, then shareholder B has no power at all.

If company A is owned by shareholder B with 30%, and 70 other shareholders with 1% each, then shareholder B has a very high degree of power.

How does it work?

When calculating the shareholder power, T-rank calculates a “Power Index”.

The structure below will give the table in Table 1.

Table 1 - Voting table

In Table 1, the shareholder power for the shareholders are calculated. There is one column for each shareholder. The rows represent the different ways the shareholders can vote, and the number of rows is equal to the number of possible voting combinations. A vote is coloured red if a change of that vote will change the result of the voting.

The shareholder power of a given shareholder is the number of red votes divided by the number of rows here 4/8 = 50% for all shareholders.

The scores produced by the Power Index should be looked upon as estimates. In real life, there could be a lot of factors influencing who are the real powerful people in a company, both technical (different share classes, shareholder agreements) and human (a son always voting in accordance with his mother, a persuasive CEO).

Shareholder power in Shareholder power & coalitions

Shareholder power is available under the chapter Shareholder power & coalitions under Corporate ownership in Orbis.

The screenshot below shows an example:

The table Most influential shareholders displays all shareholders with shareholder power above 50%, ranked according to Shareholder power. The column Influence power (%) contains the Shareholder power.

The table Possible controlling coalitions  displays groups of shareholders. If all the members of such a group vote together, they will be in control of the company.

Shareholder power in Shareholder maps

Shareholder Maps is available via the T-rank button under Shareholders by T-rank, the T-rank button under Shareholder power & coalitions and the T-rank button under Explore menu on the top of the pages.

The red numbers inside the boxes are Shareholder power. The red bars inside the boxes are the power bars, a visual representation of Shareholder power. If a box has a red frame, that is an indication of control.