Google Inc (NASDAQ:GOOG) which was looking to go for a stock split might have to wait until a lawsuit filed by a shareholder, over the unconventional arrangement is resolved.
Going forward Google Inc (NASDAQ:GOOG) plans to issue new class of stock that won’t carry voting rights. Current Google stockholders will receive one share of this new stock for each share they held previously. Even future stock grants to employees and new acquisitions will be of nonvoting class. The main objective behind all this is to ensure that its co-founders Larry Page and Sergey Brinretain retain their current voting power or have undisputed control over Google.
Google Inc (NASDAQ:GOOG) has 252.7 million shares of Class A stock and 69.5 million shares of Class B stock outstanding as of its March 31, 2011. Class B shares have 10 votes a piece, Brin and Page owe approximately 27 million Class B shares, or about 29 percent of the total voting power at Google. Another 9 million Class B shares are held by executive chairman Eric Schmidt, having 10 percent of the total voting power.
Defending their motive, Page and Brin wrote in a note published along with the company’s Q2 earnings, “We have put our hearts into Google and hope to do so for many more years to come, So we want to ensure that our corporate structure can sustain these efforts and our desire to improve the world.”
Such discriminating agreement inspired shareholder Brockton Retirement Board to sue Google in its own territory Delaware, where Google is incorporated, alleging that Page and Brin “wish to retain this power, while selling off large amounts of their stockholdings, and reaping billions of dollars in proceeds.” Google responding to the suit said, “The board analyzed the proposed stock split with great care over a long period and remains confident that it is in the best interests of Google and its shareholders.”
There might be something fishy going on as, Associated Press reports that Google didn’t announce the exact tally for the vote by which the decision to go for stock split was passed but instead it merely stated that the stock-split plan had won majority support. AP also reported that Page didn’t attend the shareholders meeting because he’s lost his voice and he won’t be attending few of the future conferences also.
