Some tech businesses seem to have a built-in activist repellent: a dual-class share structure that keeps power in the hands of management. Facebook is the poster child for this type of arrangement. The company’s Chief Executive Officer Mark Zuckerberg owns a minority stake, but his special share-class holdings give him a majority of the voting rights. This structure gives Zuckerberg a lot of freedom, like the ability to do a megadeal, like the WhatsApp purchase with very little interference from the board, shareholders or outside dealmakers. Soon after Facebook’s initial public offering, multiple-share classes had become the new normal in Silicon Valley. And many of the companies that went public during the past decade adopted some version of this structure, including Google, Groupon, LinkedIn, Twitter, Zillow and Zynga. The leaders of the Chinese online retailers JD and Alibaba are also insulated from outside forces.
Posted on: Thu, 16 Oct 2014 23:47:02 +0000
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