Google's Stock-Split Plan Would Replace Stewardship with Dictatorship

Abstract

Google recently announced that it would seek to cement its founders' control through the issuance of non-voting stock. In this commentary, I argue that while I am supportive of strong stewardship by Google's founders, its proposal would excessively entrench control and should therefore be rejected.

This article employs a comparative perspective, drawing on the trend in developed and emerging markets to eliminate or reduce the severity of multiple share classes. In addition, I distinguish Google's proposal from the discussions in the UK on granting long-term shareholders enhanced voting rights.

Keywords: Corporate governance, non-voting stock, multiple-share classes, entrenchment

JEL Classification: G32, G34