dual class shares

Dual-Class Companies: Equal (and Unequal) Treatment Agreements

By Caley Petrucci June 25, 2024 by renholding

Dual-class companies – companies with two or more classes of common stock that differ in voting rights – are as popular as they are controversial. Among the dual class ranks are technology companies Facebook (Meta) and Google (Alphabet), food and …

How Dual-Class Shares Can Promote Low-Carbon Innovation

By Alessio M. Pacces April 1, 2024 by renholding

To reduce CO2 emissions, the world needs alternatives to fossil fuels. According to the latest estimates by the International Energy Agency, 35 percent of the green energy required to reach net zero by 2050 depends on technologies not yet …

Why Multi-Class Shares Are Good for Society

By Timo Kaisanlahti February 15, 2024 by renholding

Pension funds and other institutional investors rail against dual-class shares and other tiered voting structures while companies fight vigorously to defend them. The debate over the “one share one vote” doctrine is not, however, solely jurisprudential – economists have conducted …

Dual-Class IPOs Offer Solution to Unicorn Governance Failure

By Ofer Eldar December 18, 2023 by renholding

Dual-class stock structures have proliferated in recent years. In 2017-2019, almost 30 percent of IPOs in the U.S. had a dual-class structure, and most of them were founder-controlled technology firms (Aggarwal, Eldar, Hochberg and Litov, 2020). Their increasing popularity has …

ISS Discusses Dual-Class Share Structures in Europe

By Paul Hodgson February 13, 2023 by renholding

While unequal voting structures in the U.S. are commonly associated with technology and media companies, there is no such industry specific tendency in Europe – with its tradition of so-called “loyalty shares” and government ownership. This paper surveying dual class

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Dual Class Shares in the Age of Common Ownership

By Vittoria Battocletti, Luca Enriques and Sandro Romano May 10, 2022 by renholding

Mark Zuckerberg has virtually all his personal wealth invested in Meta Platforms (formerly Facebook). His incentives as controller of Meta are thus clear: Maximize firm value and private benefits of control, irrespective of the effect that might have on other …

Discretionary Decision-Making and the S&P 500 Index

By Bernard S. Sharfman and Vincent Deluard March 30, 2021 by renholding

Discretion is an integral part of how indices, including stock market indices, are constituted, according to professors Rauterberg and Verstein and Robertson (here and here), and the S&P 500 index is no exception.

The S&P 500 is a …

The Myth of Dual Class Shares: Lessons from Asia

By Min Yan February 16, 2021 by renholding

Companies with dual class shares have, as the term suggests, two (or more) classes of common stock. One class gives its holders voting power proportionate to their equity shareholdings. The other offers a group of shareholders, normally corporate insiders, weighted …

More Than Meets the Eye: Reassessing the Empirical Evidence on U.S. Dual-Class Stock

By Bobby V. Reddy May 12, 2020 by renholding

Since Google (now Alphabet) issued dual-class stock at its IPO in 2004, the subject has been vigorously debated throughout the world.  Unlike firms whose shares all have equal voting rights (“one-share, one-vote firms”), companies with dual-class stock allow a founder …

Designing Dual Class Sunsets: The Case for a Transfer-Centered Approach

By Marc Moore December 19, 2019 by renholding

Dual class capital structures have spread exponentially in recent years across much of the corporate world, as has previously been reported on this blog. Dual class listed companies today account for around $4 trillion of US total stock market value …

Quality Shareholder Voting

By Lawrence A. Cunningham November 21, 2019 by renholding

This post lays out a new approach to shareholder voting designed to increase the voting power of long-term committed shareholders: adding votes to shares based on both long holding periods and high concentrations. Called quality voting, the approach would …

SEC Investor Advocate Calls Dual-Class Shares a Recipe for Disaster

By Rick A. Fleming October 18, 2019 by renholding

Thank you, Kerrie Waring, for your kind introduction. I appreciate the opportunity to speak at a conference where you will spend the next two days discussing the stewardship responsibilities of shareholders.[1] I know you take those responsibilities seriously, and

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The Puzzling Case of the WeWork Non-IPO

By Jonathan Barnett October 8, 2019 by renholding

The dramatic implosion of the IPO of The We Company, parent of office-sharing firm WeWork, (the “WeWork IPO) has attracted intense scrutiny across the business community.  For scholars and practitioners who work at the intersection of law, business, and technology, …

What Comes After Shareholder Primacy? Employee Empowerment

By Grant Hayden and Matthew Bodie September 16, 2019 by renholding

In corporate law, the U.S. academic elite stubbornly clings to shareholder primacy as the foundational principle of the field. The concept is simple, even elegant: Shareholders should be given ultimate control of the corporation because they are entitled to the …

ISS Discusses Dual-Class Shares: Governance Risks and Company Performance

By Kosmas Papadopoulos July 1, 2019 by renholding

Initial public offerings of companies with dual-class shares have made headlines in recent years. An increasing number of newly listed companies have introduced classes of stock with superior voting rights, which typically allow company founders and top executives to maintain …

The Neglected Role of Justification Under Conditions of Uncertainty

By Claire A. Hill and Alessio M. Pacces March 12, 2019 by renholding

A hot topic in corporate governance is the so-called short-termism of publicly held companies. In response to actual and anticipated pressure from activist hedge funds, companies are, some say, focusing too much on short-term gains by, for instance, shunning research …

The Case for Dual Class Shares

By Yvan Allaire February 8, 2019 by renholding

In recent times, the simmering feud between the church of the one share-one-vote and the heretic believers in shares with unequal voting rights has boiled over, particularly in the U.S.

The arguments pro and con this type of capital structure …

Dual Class Companies Should Adopt a Coattail Provision

By Yvan Allaire January 18, 2019 by renholding

I would like to make two points in response to Professor Coffee’s piece on dual class common stock.

First, American dual class companies should be obliged to include a “coattail” provision, as is the case in Canada. This provision, imposed …

The Demonization of Dual Class Shares

By Bernard S. Sharfman January 18, 2019 by renholding

Why have some corporate governance scholars (here, here, and here) advocated for imposing various sunset provisions on dual class shares?  After all, dual class share structures are simply the result of private ordering, that wonderful freedom …

Symposium on Dual Class Stock

By Reynolds Holding January 2, 2019 by renholding

In his December 17 piece, “Dual Class Stock: What Is a Fair Compromise?,” Professor John Coffee asked readers to suggest alternatives to his proposal for limiting dual class shares. We are posting below three insightful responses from Columbia …