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Google Inc (NASDAQ:GOOG), along with the board of directors, were sued on Monday after a shareholder vowed to block the proposed stock split.  The shareholder’s reasoning is that the stock split gives co-founders Larry Page and Sergey Brin too much say and too much safety.

As you know, Google announced earlier this month that shareholders will be getting one new share of non-voting “Class C” stock for each existing “Class A” share. This is great because Google can now use non-voting shares for acquisitions and employee incentive packages.  It should be noted that under this new plan, the co-founders have a 56.3% control over all the voting shares, giving them the ability to sway decisions and ideas within the firm.

We jump forward to May 1st when the Brockton Retirement Board filed a lawsuit against Google, saying that the co-founders “wish to retain this power, while selling off large amounts of their stockholdings, and reaping billions of dollars in proceeds,” said the documents.

The lawsuit also said that they were upset with the new “special committee” of directors that had approved the stock split because it was not a fair system in which both sides can argue but ultimately come to a compromise.

You can’t blame the Brockton Retirement Board for suing Google over this stock split.  Wall Street was very skeptical and really not on board with the idea.  Could this be a turning point for the code of conduct for the board of directors and founders?

Many firms have similar “stock splits” as Google or some other form that gives the co-founders/CEO controlling power over all.  However, it really does make the voting fair because at the end of the day, whoever has the most voting power calls the shots.  As a publicly traded company, that should not be allowed.    When you list to become a publically traded company, you better be ready to give up total control as the founder.

In terms of using non-voting shares for acquisitions and employees, this I could get behind because you do not want to give a buyout voting power because if they are against you or upset with you, they can block important proposals just because they have a lot of voting ability.  Not to mention, employees voting on shareholder issues spells trouble.

Bottom line, the days of high level executives grabbing for power may be limited.  We will have to see how this court case plays out and what standards this will set.