The dividends on a preferred stock would be obliged to be paid prior to any distribution to the owners of the business.
This is "hopelessly wrong," Craig, "sorry"
You seem to think "preferred stock" means stock means shares wherein: "the dividends ... would be obliged to be paid prior to any distribution to the owners of the business" Totally incorrect.
Perhaps you are more familiar with markets in some other country, but in the USA and other anglosphere countries, "preferred" issue almost always means special qualities relating to what happens when a company is liquidated (a common situation in the venture capital field).
Furthermore you seem to think the phrase "preferred stock" has some canonical, declarative, platonic meaning (in the same way that you think "share" can only refer to a very specific type of "share") Shares called "preferred" means nothing specific, Craig, same with "advantaged" or "early" or "special" or the like. (In fact you usually use the term like this, preferred something, ie preferred liquidation, preferred convertible or perhaps in your example [which is bizarre, see below] preferred distibution or some such.
Here is a good simple little dictionary I found as a PDF file which will mentions how "preferred" is usually used as a name for shares in the US anyway.
http://www.fenwick.com/VC_Surveys/VC_Report_Glossary_v41.pdf
Furthermore -- let's say there when a company issued shares and they called them "Zoot Shares" and the idea was: "the dividends ... would be obliged to be paid prior to any distribution to the owners of the business" Lets say furthermore that in some sortof "Craig-like" canonical, platonic way the term "Zoot Shares" could only be used to decribe shares with the notion "the dividends ... would be obliged to be paid prior to any distribution to the owners of the business."
If given all that, the notion "the dividends ... would be obliged to be paid prior to any distribution to the owners of the business" is nutty. Newsflash, most shares (eg MSFT historically, pick 1000 other examples) simply DONT PAY dividends. So the notion is confused. All your saying is the policy of the board would be agreed to lean towards paying those owners of Zoot Shares a dividend. Also, you seem to think "dividend" is linked in some way to "profit" (I suspect you have an idea that a company "makes" a given profit X, and some all-powerful figure, perhaps the government or God, divides that up - like what would happen if you and I owned a Cafe, 50% each), not so, nothing to do with it. (Since MSFT makes such a good example, they've now started paying a dividend - and it just comes out of the huge pile of cash they'd accumulated.)
In any event, you are incorrect to think that the term "preferred stock" means something like "the dividends ... would be obliged to be paid prior to any distribution to the owners of the business". (A) that is a meaningless sort of sentence, and (B) its just not the case. In the VC field in the US (and other anglosphere countries) you hear "preferred" almost exclusively meaning the shares have an advantage in relation to liquidation of the company (see the PDF thingy)
More abstractly, you seem to hink that "[name here] shares" "means" something. (Eg, preferred shares, advantaged shares, special shares, managers special issue shares, priority shares, A class shares, B class shares, D80 shares, etc.) (These days boards sometimes choose silly "marketing" names, eg, iRobots early shares might be called "precambrian shgares" or some such) Those names mean nothing Craig. They are just names for that particular run, issue, of shares -- which will have some certain group of conditions as you say (maybe especially convertible, or preferred in liquidation, etc)
Naturally, you won't believe this, but there it is for everyone else ;-)
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