Stay current on changes and developments in corporate law with a wide variety of resources and tools.
Securities regulators may want to look at a “troubling trend” of companies issuing shares with no voting rights, Vanguard Group’s former chairman and chief executive officer said.
“I think it’s a very real issue that should be addressed,” John J. Brennan said Feb. 28 at a Council of Institutional Investors conference in Washington.
Brennan, who now sits on the boards of General Electric and LPL Financial Holdings, compared the trend to a game of whack-a-mole.
It started with Alphabet Inc.’s Google and continued with Facebook Inc. as a way to insulate founders from dilution of their holdings when issuing a new class of shares. Now Snap Inc. is set to become the first company in the U.S. to go public with non-voting stock.
The Council of Institutional Investors has objected to Snap’s plan because it means buyers of its Class A common shares will have no say on topics such as executive compensation and director nominations.
BlackRock, State Street Global Advisors and other asset managers and owners with more than $17 trillion have also come out against dual-class shares or other structures that create unequal voting rights among shareholders. A voluntary framework for U.S. corporate governance and investor stewardship they put out earlier this month endorsed a one-share, one-vote standard.
“It’s being able to hold those folks inside the boardroom accountable,” Aeisha Mastagni, a portfolio manager at the California State Teachers’ Retirement System (CalSTRS) who helped write the framework, said at the conference. “They’re representing our interests and without those voting rights, it’s impossible to do that.”
Brennan said “there’s an argument” the issue needs to move up from the level of shareholders to regulators. “Should the SEC [Securities and Exchange Commission] address this issue?” he asked.
The SEC Investor Advisory Committee is scheduled March 9 to discuss unequal voting rights of common shares.
To contact the reporter on this story: Andrea Vittorio in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Yin Wilczek at email@example.com
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)