Common Stock

• The majority of company shares are common stock. Common stockholders typically have the right to vote on members of the board of directors, potential mergers and acquisitions, and other matters that constitute fundamental corporate changes. Should the directors declare dividends, common stockholders typically have the right to dividends in proportion to the company's profits.
  
  

Preferred Stock

• Preferred stockholders typically have the right to receive fixed, regular dividend payments and do not involve themselves in the company's decisions. Should the board fail to declare dividends, however, preferred shareholders typically gain the right to vote on directors for the board.
  
  

Shareholder Priority

• If the board should fail to declare dividends, preferred shareholders typically have the right to repayment for all missed dividend payments before common shareholders get repaid. Should the company liquidate and find itself with insufficient assets to satisfy all claims, preferred shareholders recoup their investment before common shareholders do although the company must repay all debt before repaying any of its shareholders.