Ask HN: Why would stockholders vote to increase # of issuable common shares?

Why would stockholders vote to increase the number of authorized shares as in the following?

http://bnymellon.mobular.net/bnymellon/fds/document_1/Proxy%20Statement.pdf ( see: recommendation #3 on page 2)

The only benefit I see here is if I really believe in the company's governance and want to help them from being taken over, assuming there is truly a takeover threat present. Though ownership looks diverse to me?:

http://investors.morningstar.com/ownership/shareholders-major.html?t=FDS

Can anyone help me understand? Surely there is something else to it. Thanks!

5 comments

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lukesandberg 14y ago ↗

This is just a guess but my intuition is that a company issues stock in order to raise capital. So if the company has a useful investment opportunity that would affect its long term profitability then raising the capital in equity markets might be a good strategy. Rational investors would weigh the possibility of stock dilution vs. long term profitability and make a choice.

studentrob 14y ago ↗

Yea that makes sense, so obvious now that I think of it. Presumably it's easier or more cost effective to raise capital this way than to try to issue bonds. Thanks!

dfc 14y ago ↗

I hope this was not a hw question for you.

? thanks for making my question seem dumber

No worries;) I only said that because of your username...