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I'm not opposed to the use of multi-class shares in private companies, but for public companies I think that they should be phased out in line with the proposal
by hendzen 8y ago
I'm not opposed to the use of multi-class shares in private companies, but for public companies I think that they should be phased out in line with the proposal from the SEC commissioner's speech. The self-dealing in the OP is another matter entirely -- and potentially worthy of a shareholder lawsuit for breach of fiduciary duty.
- scarface74 8y agoThere are two sides to the coin, a good founder/CEO that has a controlling interest in the company can make long term strategic plans without fear of repercussions from short sighted investors.
- mfoy_ 8y agoBut you can be a good founder/CEO and have a controlling interest in the company without using multi-class shares if you simply retain the majority of shares. Problems such as the one mentioned in this article start occurring when multi-class share schemes start allowing the founder to effectively sell off most of the company while still retaining total control.
- hendzen 8y agoRead the SEC commissioner's speech that I linked, seriously. He doesn't propose banning them entirely, just phasing them out over a period of time. Clearly there is a flipside to carte blanche founder control when the CEO/Founder is underperforming yet can't be removed (e.g. Evan Spiegel). Do you think Mark Zuckerberg's children should retain majority control of Facebook after he dies?
- anticensor 8y agoSolution: Disallow inheritance of company shares.