Each of the Class B shares reserved for insiders will carry 10 votes, while the ordinary Class A shares sold to the public will have just one vote each – a common ratio among the approximately 600 dual-class companies. The largest such companies are Berkshire Hathaway Inc., Viacom Inc., Comcast Corp., Cox Communications Inc. and Columbia Hospital Corp. Super shares are designed to give specific shareholders voting control, and in most cases these shares are not publicly traded. Shareholders-rights groups have long complained that dual-share systems violate the key one-share, one-vote principle.
Do these arrangements really undermine the interests of people who own ordinary single-vote shares? Or do they help stabilize companies by insulating against takeover attempts and other disruptive events, as their proponents claim? The answers have important implications for the vast majority of companies that issue just one class of stock, because they shed light on another, broader question: Do ordinary shareholders benefit when a company’s executives, directors and founders own large blocks of shares?
It depends on the nature of the ownership, says Wharton finance professor Andrew Metrick. “Voting ownership is bad, economic ownership is good,” he said, summarizing the results of a study that compared hundreds of dual-class companies with the larger universe of single-class companies from 1994 through 2001. “What you’d really like to do is give managers a lot of economic ownership in a company, but no votes, which is the opposite of what you see in most dual-class companies.
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