Google just announced plans for a new stock structure, which effectively creates a 2-for-1 stock split.Every shareholder will get a non-voting share of Google stock which will be listed on the NASDAQ.
Google will basically have two types of stocks trading on the NASDAQ. It will have an “A share” which is the stock with voting powers, and a “C share,” which doesn’t have voting powers.
Google is doing this so that its founders can maintain control over the company, while still paying out equity based compensation.
This was a much more common manoeuvre years ago. Warren Buffett’s Berkshire Hathaway has a similar structure. In general, the “C shares” tend to trade at a discount to the “A shares.”
The stock is up 1% on the news in after-hour trading.
Here’s the explanation of the move:
Today we announced plans to create a new class of non-voting capital stock, which will be listed on NASDAQ. These shares will be distributed via a stock dividend to all existing stockholders: the owner of each existing share will receive one new share of the non-voting stock, giving investors twice the number of shares they had before. It’s effectively a two-for-one stock split—something many of our investors have long asked us for. These non-voting shares will be available for corporate uses, like equity-based employee compensation, that might otherwise dilute our governance structure.
We recognise that some people, particularly those who opposed this structure at the start, won’t support this change—and we understand that other companies have been very successful with more traditional governance models. But after careful consideration with our board of directors, we have decided that maintaining this founder-led approach is in the best interests of Google, our shareholders and our users. Having the flexibility to use stock without diluting our structure will help ensure we are set up for success for decades to come.
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