- About CII
- Board of Directors
- U.S. Asset Owners Advisory Council
- Corporate Governance Advisory Council
- Markets Advisory Council
- Committees & Working Groups
- CII Staff
- Press Releases
Leading Investor Group Fall Conference
September 11-13, Long Beach, CA
CII Elects Board Members for 2023-2024 Leading Investor Group Spring Conference,
March 6-8, Washington, D.C.
CII Hails SEC for Closing Rule 10b5-1 Insider Trading Loopholes Leading Investor Group Fall Conference
September 21-23, Boston
CII Elects Board Members for 2022-2023 - Members Also Approve Revised Policies on Poison Pills and Shareholder Meetings CII Spring Conference, March 7-9, Washington, D.C. Leading Investor Group Hails SEC Rule Requiring Universal Proxy Cards in Contests for Board Seats CII Virtual Fall Conference, September 22-24 CII Elects Board Members for 2021-2022 CII Virtual Spring Conference, March 8-10 SEC Muzzles the Voice of Investors by Raising the Bar on Shareholder Proposals Leading Investor Group Seeks Strengthened Sustainability Reporting CII Virtual Fall Conference, September 17-22 Leading Investor Group Dismayed by SEC Proxy Advice Rules Leading Investor Group Calls for Action on Racism Amy Borrus to Become Executive Director of the
Council of Institutional Investors on July 1
CII Statement on Virtual Shareholder Meetings During Public Health Emergency CII Elects Board Members for 2020-2021, Approves Three Policies CII Spring Conference, March 9-11, Washington, D.C. Leading Investor Group Blasts SEC’s Proposed Rules for Proxy Advice and Shareholder Proposals CII Announces Advisory Council Members for 2020 Leading Investor Group Rebukes SEC for Proposed Rules That Undercut Critical Shareholder Rights Leading Investor Group Urges Companies to Commit to Long-Term Executive Compensation Council of Institutional Investors Board Appoints Amy Borrus to Succeed Ken Bertsch as Executive Director Media Advisory: CII Fall Conference, September 16-18, Minneapolis Council of Institutional Investors Responds to Business
Roundtable Statement on Corporate Purpose
Leading Investor Group Calls Out Directors Responsible for
Dual-Class Companies Without “Sunsets”
Leading Investor Group Petitions SEC to Require Clear Disclosure on CEO Pay Targets Council of Institutional Investors Says Lyft’s Planned Dual-Class Structure is Harmful to Investors Media Advisory
CII Spring Conference, March 4-6, Washington, D.C.
CII Statement on Share Buybacks CII Research and Education Fund Publishes
Guide to Disclosure of Board Evaluation Processes
Investor Group Applauds CommonSense Principles 2.0 CII Fall Conference, October 23-25, New York City Leading Investor Group Responds to President’s Tweet on Quarterly Financial Reporting Investor Group Responds to Wall Street Journal Editorial CII Applauds Shareholder Protections in House Bill CII Elects New Board, Names Florida SBA Executive
Director & CIO Ashbel Williams Chair
New Report Details Practical Steps Corporate Boards Can Take to Combat Sexual Harassment CII Applauds SEC Commissioner Jackson's Call for Listing Standards to Require Sunsets on Dual-Class Stock CII Spring Conference, March 12-14, Washington. D.C. CII Announces Advisory Council Members for 2018 CII Report Highlights Risks Associated with a Common Chinese Corporate Structure Institutional Investors Oppose Stitch Fix Dual-Class Structure but Welcome Sunset Provision Uber’s Governance — Investor Response Do Not Disadvantage US Investors on Research,
CII Asks SEC
CII Fall Conference, September 13-15, San Diego CII Welcomes S&P Dow Jones’ Decision to Ban New Multi-Class Companies from Key Stock Indexes CII Applauds FTSE Russell Decision to Set Voting Rights
Minimum for Inclusion on Indexes
Investor Group Urges Blue Apron to Ditch No-Vote Shares Institutional Investors Dismayed by House Passage of
Financial CHOICE Act
CII, Institutional Investors with $4+ Trillion in Assets Oppose
Anti-Shareholder Provisions of the CHOICE Act
- CII in the News
- Governance & Financial Information
- Contact Us
- CII Research and Education Fund
Council of Institutional Investors Says Lyft’s Planned Dual-Class Structure is Harmful to Investors
CII Reiterates Call for NYSE, NASDAQ to Curb Listings of New Dual-Class CompaniesWashington, D.C., March 2, 2019 — The Council of Institutional Investors (CII) today expressed deep concern about Lyft Inc.’s initial public offering (IPO) filing because of its egregious dual-class share capital structure and the lack of “sunset provisions” to unwind it within a reasonable time period. Sunset provisions are an essential tool for protecting public investors in dual-class companies by ensuring adoption of “one-share, one-vote” voting power that is directly proportional to an investor’s capital at risk.
Lyft’s IPO filing at the Securities and Exchange Commission revealed plans to create two classes of stock: Class A shares with one vote per share for public shareholders, with the founders holding Class B shares that have 20 votes per share. This means that the founders will have voting control over the company even though their equity stake in Lyft is less than 10%. The Lyft filing is particularly troubling given that dual-class voting structures typically have 10-1 voting power, and as a large private company, Lyft currently is “one-share, one-vote”.
“Lyft’s dual-class share structure leaves investors virtually powerless,” said Ken Bertsch, CII executive director. “This is highly risky for long-horizon investors and for the integrity of the capital markets,” he added. “The message the filing sends is that the Lyft founders can govern the company as supreme monarchs in perpetuity and also that they have a ‘let them eat cake’ attitude toward their investors.”
Instead, Bertsch added, “Lyft should incorporate provisions to adopt a ‘one-share, one-vote’ structure within a reasonable amount of time. CII and many institutional investors support seven-year time-based sunsets as a sensible solution to the growing problem of unequal voting rights, which deprive shareholders of the means to hold executives and directors accountable.” CII wrote to Lyft board members on Feb. 13, 2019, requesting that they put in place a time-based sunset on the dual-class structure.
CII, which represents pension funds and other long-term investors, has petitioned the New York Stock Exchange (NYSE) and the NASDAQ, urging the exchanges to act to counter the trend of companies going public with unequal voting rights. Specifically, the petitions ask the exchanges to amend their listing standards to require that, going forward, companies seeking to list that have multiple share classes with differential voting rights include in their governing documents provisions that convert the share structure within seven years of IPO to a single class of common shares with equal voting rights. CII’s members believe that equal voting rights are a fundamental tenet of strong corporate governance.
A growing number of companies are making their public debut with time-based sunsets. Of 38 U.S. companies that went public in 2017 and 2018 with multi-class structures, CII tracked 11 (29%) that incorporated simple time-based sunsets. And a small but growing share of multi-class IPO companies have used time-based sunsets successfully. Examples include Groupon (converted to a single share class after five years), Texas Roadhouse (converted after five years) and MaxLinear (converted after seven years). Well-established dual-class companies (notably CBS and Viacom) have been distracted by fights related to control, and even privately-owned Uber opted to convert to “one-share, one-vote” after scandals rocked the company.
The Council of Institutional Investors (CII) is a nonprofit, nonpartisan association of pension funds, other employee benefit funds, endowments and foundations, with combined assets of about $4 trillion. CII's non-voting members include asset management firms with more than $35 trillion under management. CII is a leading voice for effective corporate governance, strong shareowner rights and vibrant, transparent and fair capital markets. CII promotes policies that enhance long-term value for U.S. institutional asset owners and their beneficiaries.
Click for PDF version. For media inquiries, please contact CII Deputy Director Amy Borrus.