For the first time after its initial public offering, Google Inc (NASDAQ:GOOG) announced a stock split.
Google Inc (NASDAQ:GOOG) on Thursday announced its board has approved split of its stocks to create a new class of “C” stock that carries no voting power.
Google crossed legal hurdle
The search giant announced a stock split over three years ago, but then investors sued it over the split of its common stock. Investors filed a suit as they felt it would make it possible for Google co-founders Sergey Brin and Larry Page to strengthen their control over the massive company unfairly.
However, now Google is finally ready to split its stock for the first time, more than three years after the co-founders began discussing a move engineered to ensure they remain in control of the internet’s most powerful company.
The split is scheduled to occur April 2.
Class C to trade under GOOG
The stock split announced Thursday will create a new class of “C” stock that carries no voting power. One share of C stock will be distributed for each share of voting Class A stock owned as of March 27. Initially the value of the current stock will be divided equally between the two types of shares. However, they will then trade separately with different ticker symbols.
Class C shares will get the company’s existing “GOOG” ticker symbol, while Class A will change to “GOOGL”.
The proposed unorthodox split could preserve the co-founders’ power in the company by addressing their concerns that they would lose control of Google as the company creates more shares to compensate its employees and buy startups.
Delay ensured a milestone
The co-founders primarily own Google’s Class B stock, which already gives them 10 times the voting power of each Class A share. Cumulatively, the co-founders control 56% of the shareholder votes, though they own less than 15% of the stock issued.
Consequent to Google using Class A stock to reward employees and finance some of its acquisitions during the past decade, the co-founders’ voting clout has been gradually shrinking.
Interestingly, had Google split its stock earlier, it might have missed a major milestone. Last October, Google’s shares topped $1,000 for the first time and have since gone past $1,100.