Google's founders recently announced a new corporate structure designed to perpetuate their grip over the company. Fortune writes that everyone should beware.
Google's founders announced a plan designed to perpetuate their ironclad grip on the long-term governance of the company. With the board's blessing, the company will issue a new non-voting class of shares to existing shareholders. Because the founders currently hold majority-voting rights, the plan does not require that shareholders give their consent to the dilution of their future voting power. The action comes amid ongoing stock sales by Google's (GOOG) founders.
While this edict by the founders is important to Google stockholders, users of Google's products, and owners of other stocks -- outright or in mutual funds or retirements savings plans -- should also beware.
Other technology firms, like Facebook, and financial firms, like Carlyle, are attempting to gain access to public market funding without giving shareholders a mechanism to keep the founders accountable. In a conference call with analysts on April 12, Google CEO Larry Page took credit for a similar lack of voting rights at other companies. "Given Google's success, it's unsurprising this type of dual-class governance structure is now somewhat standard among newer technology companies," he said….
Find out more. Go to http://management.fortune.cnn.com/2012/04/27/google-stock-revamp-woes/?iid=SF_F_LN