From Suits S04E04:

You do that, it triggers a stock split.

His shares double in voting power.

Yours don't.

I never really got that. If you own 20% of the stock just before the split, you own 20% of the stock just after the split; am I wrong?

Probably poison pill: See Movies TV SE

  • 2
    You are correct. Stock splits mean everyone gets more shares. The only exception might be if the company offers different "classes" of stock or the company is doing something truly unusual. – user1731 Dec 26 '16 at 17:19
  • @base64 the point of the edit is that i'm right in general, but there may be some info in the show that possibly makes the characters correct? merry christmas! ^-^ – BCLC Dec 26 '16 at 17:31

Ordinarily a stock split increases all shareholders' share counts, so that there is no change in anybody's voting power. For example, if you owned 1% of the company before the split, after the split you now have twice as many shares, but there are now twice as many shares outstanding, so you still own 1% of the company. Also, stock splits are not ordinarily "triggered". Usually they happen when the board decides that for one reason or another it's desirable to increase the number of shares in circulation, which causes the price of each share to decrease proportionally.

I'm not familiar with the show, and in particular I don't know what the action is that the character being addressed is thinking of taking, but it sounds like they are describing something akin to a "poison pill". In these arrangements, the "pill" is triggered by some predefined condition, say a party acquiring shares in excess of a defined threshold. What typically happens is that shareholders other than the ones who triggered the pill get a chance to buy shares at a substantial discount, thereby diluting the shares of the party that triggered it. Because the other shareholders have to buy their additional shares, albeit at a discount, and because it applies only to certain shares, it's not really a split, but it's close enough that the writers of the show may have felt it was worth using the term that is more familiar to the public.

  • 1
    To you as well, and a happy and prosperous new year. – Nobody Dec 27 '16 at 13:27

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