Over the last decade, company founders have been opting to shore up control by creating multi-class voting structures that undercut shareholder voting power. This stock ownership structure reduces shareholder influence, undermines corporate governance and shifts the burden of investment grievances to the courts.
Multi-class capitalizations â in which founders and other insiders retain a class of high-vote shares while selling low-vote shares to the public â are nothing new for controlled companies. This mechanism has long allowed founding individuals and families to leverage minority economic ownership â say 10% or 20% â into total voting control of large companies, such as Facebook and Google.