The vast majority of U.S. publicly traded companies embrace this corporate governance best practice. But a significant and growing number of start-up companies are opting for dual-class or multi-class share structures with unequal voting rights. Such companies typically have a superior class of shares with more votes per share than the inferior class with only one vote per share—or, in some cases, no vote at all. Company founders, their families or other insiders typically hold the superior class of shares, giving them majority voting rights even when they hold minority ownership and risk. This concentrates voting power in insiders’ hands, giving them effective control of board-of-director elections and other matters that are put before shareowners for a vote.
Dual-class share structures pose greater risks to investors and make boards and insiders less accountable to shareowners. A recent study found that companies with a dual-class stock structure often do not perform as well as companies with a single class of stock and have more stock-price volatility.
|Resources & Advocacy|
|CII corporate governance policy on "one share, one vote"|
|Nov. 1, 2012||Post-Teleconference recording on "one share, one vote" (members only)|
|Aug. 20, 2014||CII letter to Swift Transportation on shareowner proposal calling for one share, one vote|
|Aug. 12, 2014||CII letters to Cablevision Systems, Donegal Group, Facebook, Ford (Sept. 11 response), Google and Spirit AeroSystems on shareowner proposals calling for one share, one vote|
|March 27, 2014||CII letter to NYSE on one share, one vote|
|March 27, 2014||CII letter to NASDAQ on one share, one vote|
|March 27, 2014||CII letter to the London Stock Exchange on one share, one vote|
|March 27, 2014||CII letter to the Hong Kong Exchange on one share, one vote|
|Dec. 10, 2012||CII follow-up letter to NYSE meeting on dual-class stock|
|Oct. 2, 2012||CII letter to NYSE urging end to new listings of dual-class stock companies|
|Oct. 2, 2012||CII letter to Nasdaq urging end to new listings of dual-class stock companies|