Nepo-Babies In the Boardroom

“Neo-babies” is the term for the children of Hollywood power players who use their connections to get jobs. It’s now also being applied to corporate boardrooms in connection with succession planning. Why should the next CEO of FOX, a publicly held company, be limited to only people with the last name Murdoch? Could it be the dual class structure that makes everyone on the board complicit?

Several hundred companies in the U.S. employ dual-class stock ownership structures, which allows them to pass down super-voting shares through the family.Most public companies have a single-class stock structure, meaning one stock equals one vote.In contrast, a dual-class stock structure allows for two or more classes of shares, one which can hold comparatively more voting rights than the others. This empowers corporate executives to benefit from public investment in their company while maintaining perpetual control and limiting the investor’s power.

Former SEC commissioner Robert J. Jackson Jr. warned in 2018 that these forever shares “don’t just ask investors to trust a visionary founder. It asks them to trust that founder’s kids. And their kids’ kids. And their grandkid’s kids.”

When the ‘idiot heir’ brings down the entire empire: Corporate royalty may keep the company bloodline strong, but it can pose a real threat to the rest of us

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