Commentary: Dual-class structures rob voices of shareholders – Pensions & Investments

CII’s Amy Borrus writes about concerns that dual class IPOs without a sunset provision will limit shareholder oversight and leave companies less nimble and adaptable to change.

[W]hen it comes to how they govern their companies, too many founders embrace frameworks that are bulwarks against change that are highly hazardous for investors. How? By going public with dual- or even triple-class stock structures with unequal voting rights for investors that guarantee founders and other insiders voting control that can last decades, even as their equity stake shrinks.

At Lyft, for example, the two founders will have Class B shares with 20 votes per share, giving them control of the company even though they will own less than 10% of the stock. Public shareholders will have Class A shares with one vote per share. This will let the founders govern the company as supreme monarchs in perpetuity while taking a “let them eat cake” attitude toward their investors.

Source: Commentary: Dual-class structures rob voices of shareholders – Pensions & Investments

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