Shopify Inc. shareholders SHOP-T have voted in favor of giving CEO Tobias Lutke a special “part of the founder” that consolidates his control of the company.
At an annual meeting on Tuesday, shareholders voted to give Mr. Lutke, his family and affiliates 40% of the total voting power on Shopify. While Mr. If Lutke remains in office as an official, he will not be required to relinquish his share of non-transferable founder, even if his shareholding in the capital is diluted to 1.1 percent, according to the agreement.
In addition, Shopify investors also voted on Tuesday to carry out a 10-share split for one of the company’s Class A and B shares. The company positioned the division of shares as a way to make voting shares affordable for a wider segment of the population and diversify its ownership base. Stock divisions have been a trend for several other technology companies, from Amazon.com Inc. to Google’s parent company, Alphabet Inc., announcing similar measures this year.
In recent weeks, three leading proxy advisory firms have warned their customers not to vote in favor of Shopify’s motion, saying the proposal goes against industry standards and would cause problems for the board. . A special committee of the Ottawa-based e-commerce company had recommended to shareholders to vote in favor of the proposal, calling it a beneficial way to modernize the company’s governance structure.
Institutional Shareholder Services Inc. Associates Shehrbano Khan and Nicholas Stiege called Shopify’s motion “inappropriate” in a May 24 note to customers, saying the now-approved deal would have an inflationary effect on the disparity between voting power and turnout. the company. .
Separately, in a report last week, Egan-Jones Ratings Co. he said the new Shopify deal “is not in the best interest of the company and its shareholders”.
“We believe this proposal would give essentially practical control of the company at the expense of other non-family shareholders, even if the legal definitions of such control are not met,” Egan-Jones told his clients.
More to come.
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