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It certainly is a power grab, but that doesn't necessarily make it evil. Evil would be deceptively creating some sort of financial instrument and masking the fa

It certainly is a power grab, but that doesn't necessarily make it evil. Evil would be deceptively creating some sort of financial instrument and masking the fact that outside Shareholders will lose voting power. But creating new shares which have no voting rights is a common move, and it seems like Google is being pretty open about it.

sp332 15y ago
It's tyranny of the majority shareholders. If you own 49% of Google's stock, you don't have 49% of the power. You have 0 power because whatever Larry and Sergey says, goes.
- SatvikBeri 15y ago
  You're correct, and the reason I say this particular tyranny of the majority is not evil is because Google has always explicitly stated that they never intend to let their outside shareholders have any power over corporate decisions. Same with Facebook...in fact, these companies have basically stated that if they weren't legally required to have an IPO, they wouldn't. If Google had ever claimed that they would listen to outside shareholders, or even if they hadn't gone out of their way to state that they wouldn't, then the power grab would be deceptive and evil.
  - helmut_hed 15y ago
    Google and Facebook were/are "legally required" to have IPOs? I believe they are only required to release financial statements. Even if that were true, though, claiming this is their sole reason to IPO strikes me as disingenuous, given the improvement in liquidity it provided/will provide for the fortunes of the company's insiders. Surely that played a significant role in their decision-making.
    - deleted 15y ago
      [deleted]
    - SatvikBeri 15y ago
      A company is legally required to go public when it has more than 500 shareholders. Google had significant cash reserves before going public and has never had a period where they spent enough cash to go below what they received from the IPO. Facebook is in a similar position of having tons of cash and nothing to do with it. Not to mention, both companies delayed their IPO as long as legally possible, which strongly suggests that they wouldn't have filed if they could get away with it. That's not to say that there are no benefits from becoming a public company. It makes life much better for the employees who received stock options (though it doesn't provide as much of a benefit to, e.g., Larry Page and Sergey Brin). But it's fair to say that neither Google nor Facebook were enthusiastic about going public.
deleted 15y ago
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AnthonyMouse 15y ago
And it's not like this is some coup where they come in and deprive the existing shareholders of their voting rights -- or, for that matter, of anything whatsoever. The status quo distribution of voting rights remains. It seems like they're doing this for exactly the reason they say they are: They want to be able to grant employees an equity stake in the company without diluting the voting rights of existing shareholders. No one would have any right to complain if they chose instead to maintain the existing distribution of voting rights by paying employees in cash rather issuing new shares. Which makes the only thing you can legitimately complain about that this will cause them to tend to issue more stock as employee compensation rather than paying in cash -- and that's just a business decision. (And generally a pretty good one for the shareholders, since employees with an equity interest in the company have a direct financial interest in ensuring the company's success.)

sp332 15y ago

It's tyranny of the majority shareholders. If you own 49% of Google's stock, you don't have 49% of the power. You have 0 power because whatever Larry and Sergey says, goes.

SatvikBeri 15y ago
You're correct, and the reason I say this particular tyranny of the majority is not evil is because Google has always explicitly stated that they never intend to let their outside shareholders have any power over corporate decisions. Same with Facebook...in fact, these companies have basically stated that if they weren't legally required to have an IPO, they wouldn't. If Google had ever claimed that they would listen to outside shareholders, or even if they hadn't gone out of their way to state that they wouldn't, then the power grab would be deceptive and evil.
- helmut_hed 15y ago
  Google and Facebook were/are "legally required" to have IPOs? I believe they are only required to release financial statements. Even if that were true, though, claiming this is their sole reason to IPO strikes me as disingenuous, given the improvement in liquidity it provided/will provide for the fortunes of the company's insiders. Surely that played a significant role in their decision-making.
  - deleted 15y ago
    [deleted]
  - SatvikBeri 15y ago
    A company is legally required to go public when it has more than 500 shareholders. Google had significant cash reserves before going public and has never had a period where they spent enough cash to go below what they received from the IPO. Facebook is in a similar position of having tons of cash and nothing to do with it. Not to mention, both companies delayed their IPO as long as legally possible, which strongly suggests that they wouldn't have filed if they could get away with it. That's not to say that there are no benefits from becoming a public company. It makes life much better for the employees who received stock options (though it doesn't provide as much of a benefit to, e.g., Larry Page and Sergey Brin). But it's fair to say that neither Google nor Facebook were enthusiastic about going public.

deleted 15y ago

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AnthonyMouse 15y ago

And it's not like this is some coup where they come in and deprive the existing shareholders of their voting rights -- or, for that matter, of anything whatsoever. The status quo distribution of voting rights remains. It seems like they're doing this for exactly the reason they say they are: They want to be able to grant employees an equity stake in the company without diluting the voting rights of existing shareholders. No one would have any right to complain if they chose instead to maintain the existing distribution of voting rights by paying employees in cash rather issuing new shares. Which makes the only thing you can legitimately complain about that this will cause them to tend to issue more stock as employee compensation rather than paying in cash -- and that's just a business decision. (And generally a pretty good one for the shareholders, since employees with an equity interest in the company have a direct financial interest in ensuring the company's success.)