Connect with us

Hi, what are you looking for?

Social Media

Mr. IPO thinks super-voting shares would continue despite market changes.

PARK CITY, UTAH - JANUARY 23: General view of Lyft signage during the Sundance Film Festival on January 23, 2023 in Park City, Utah. (Photo by Mat Hayward/Getty Images)

Yesterday, Lyft announced that its co-founders, John Zimmer and Logan Green, will step away from running the company but remain on the board. However, they must remain “service providers” in a separate regulatory filing to earn their equity reward agreements. (If Lyft is sold or they’re ousted from the board, these “time-based” vesting criteria will accelerate 100%.)

Their first awards were lavish, like many entrepreneurs who have utilized multi-class voting arrangements to gain control. For example, when Lyft went public in 2019, its dual-class share structure gave Green and Zimmer super-voting shares that gave them 20 votes per share for life and nine to 18 months after the last co-founder died, during which a trustee would hold control.

Even when IT companies adopted such agreements, it sounded excessive. However, Mr. IPO Jay Ritter, a University of Florida professor who tracks and analyzes IPOs, argues that Lyft’s trajectory may make stockholders even less cautious of dual-stock arrangements.

For one reason, founders lose influence when they sell their shares, which changes to a one-vote-per-share structure. Google’s founders, though, created a new share class in 2012 to retain authority. He told the WSJ yesterday that Zimmer holds 12% of Lyft’s shareholder voting rights and Green 20%.

Ritter adds that shareholders police tech businesses with dual-class shares. Similarly, look at Lyft, whose shares sold 86% below their IPO price earlier today, indicating investors have lost faith in the company.

Last night, Ritter explained why stakeholders are unlikely to fight super-voting shares, even if now is the moment. These are lightly edited excerpts from that chat.

TC: To seem founder-friendly, VCs and exchanges gave founders majority voting power during the previous decade. Your analysis shows that IT businesses going public with dual-class shares increased from 15% to 46% between 2012 and last year. As the market has narrowed and founders have less money, should this change?

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

The future of technological innovation is here. Be the first to discover the latest advancements, insights, and reviews. Join us in shaping the future.
SUBSCRIBE

You May Also Like

News

Intense Scrutiny of Stormy Daniels’ Testimony in Trump Trial Stormy Daniels has become a pivotal witness at some point of the excessive-profile trial of...

Electronics

Presenting the Samsung 65” Class OLED S95C TV—the height of current fashion and stunning visual readability. With a mean rating of 4.1 stars based...

Gadgets

Overview Samsung’s Galaxy Z Flip 5’s large cover screen enabled app access without unfolding, a significant improvement over its predecessor. As excitement builds for...

Electronics

Reassessing Entertainment Choices: Streaming Costs vs. Physical Media Many customers are reassessing their leisure alternatives in light of the growth of streaming offerings combining...

SUBSCRIBE

The future of technological innovation is here. Be the first to discover the latest advancements, insights, and reviews. Join us in shaping the future.