Google’s announced plans to issue a new class of shares in a move that cements its co-founders’ control over the company.
The stock split will see existing shareholders given one additional share for each one they own; however, the new shares won’t carry voting rights.
Founders Larry Page and Sergey Brin have kept tight control over the company from the start, introducing a dual-class voting structure when the company went public in 2004.
Page and Brin acknowledged at the time that it left them with an unusual level of control.
“While this decision was controversial at the time, we believe with hindsight it was absolutely the right thing to do,” they say in yesterday’s letter to investors.
“We have a structure that prevents outside parties from taking over or unduly influencing our management decisions. However, day-to-day dilution from routine equity-based employee compensation and other possible dilution, such as stock-based acquisitions, will likely undermine this dual-class structure and our aspirations for Google over the very long term.”
The stock split, they say, should prevent this from happening.
Page and Brin say there’s no particular significance to the timing of the announcement: “we don’t have an unusually big acquisition planned, in case you were wondering,” they say.
The proposal – which has been approved by the board but needs the nod from shareholders – comes as the company announces its quarterly results. Revenues were up 24 percent at $10.65 billion, with profits shooting up 61 percent to $2.89 billion.