Entrepreneurship and Small Business (ESB) Certification Practice Exam

What is the term for an individual who votes on the management of a company?

1. Employee

2. Stockholder

3. Manager

4. CEO

The correct answer is: Stockholder

The term for an individual who votes on the management of a company is a stockholder, also known as a shareholder. Stockholders are individuals or entities that own shares in a company, typically representing a fraction of the ownership. This ownership entitles them to vote on important company matters, such as the election of the board of directors and other major corporate policies. Stockholders have a vested interest in the company's performance and governance, as their investment is directly tied to the company’s profitability and overall success. Their ability to vote gives them a significant role in shaping the direction of the company, including influencing decisions regarding mergers, acquisitions, or changes in corporate strategy. Other roles, such as employees, managers, or a CEO, do not inherently have voting rights on behalf of the company at a shareholder meeting. While employees contribute to the operation of the company and managers oversee day-to-day activities, they do not possess ownership stakes that include voting power. The CEO, while a key executive, also does not automatically have voting rights unless they are a stockholder themselves. Thus, the correct identification of a stockholder as the individual who votes on management decisions clarifies the understanding of corporate governance dynamics.