Voting Rights

[Guest]

What is it? 
A company will structure its classes of shares to assign more voting rights to certain shareholders. Companies hold elections to select board members and decide company policy. 

Here’s a quick example
Uber categorized its shares into Class A and Class B shares. 

• Class A shareholders had one vote per share
• Class B shareholders had 10 votes per share

But Uber recently nixed any classes of shares with additional voting rights (i.e. Class B) to strip voting power away from ex-CEO Travis Kalanick.

What’s the point?
Creating Class B shares has become a common strategy for tech companies (and others) to concentrate ALL VOTING POWER with the original founders/investors…even if they don’t own a majority stake in the company. 

For example, Google’s founders Larry Page and Sergey Brin don’t own the majority of Google’s stock, but because they own 83% of Class B shares, they control 51% of Google’s voting rights.