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Super voting shares separate votes from ownership
How they work
A founder holding them has the right to control the company without the economic ownership that control would usually require. They are a pretty common thing, and Larry and Sergey at Google were maybe the first prominent founders to get them, followed by Mark Zuckerberg at Facebook.
What they protect
They can stabilize a company. As long as the founders are there overseeing things, the company is not subject to takeover attempts.
The cost of trust
The cost is trust. Founders with these shares effectively cannot be removed no matter what they do, so the arrangement depends on their having earned that trust. Anthropic's founders reportedly hold about two percent each, a relatively low figure for the time of an IPO that is still worth tens of billions of dollars, and there is an active debate over whether to give Dario, Anthropic's chief executive, super voting shares.
How do dual-class share structures work?
A company issues two classes of stock, and one class carries more votes per share than the other. At Google, Class B shares held by insiders carry ten votes each, and the Class A shares sold to the public carry one. Facebook, now Meta, structured its Class B shares the same way at ten votes each. Owners of the high-vote class can therefore control shareholder votes while holding a minority of the economic value.
Why did index providers object to them?
In 2017, S&P Dow Jones Indices announced it would exclude new companies with multiple share classes from its flagship US indexes, after Snap sold shares with no votes at all. Critics of dual-class structures argued that public investors were taking on risk without a say. Supporters pointed to the long-term focus founders could keep. S&P reversed the policy in 2023.
Why can't buyers take over dual-class companies?
A hostile takeover works by buying enough shares to win a majority of the votes. At a dual-class company, the founders hold a block of votes far larger than their economic stake. No offer to the public shareholders can purchase that block, since the founders would have to agree to sell. Tender offers, a standard takeover tool, therefore fail without the founders' consent.
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