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Google creators to sell stock, cede majority control by 2014

Posted on January 23rd, 2010

By 2014, Google founders Larry Page and Sergey Brin will have sold enough of their stock to give up majority control of the company, Google declare Friday evening. In November, Page and Brin entered long-term stock disposal agreements, a very common move designed to give uber-rich executives the aptitude to diversify their portfolios over time without scaring the stock market. But what’s significant about this particular plan is that by the end of it–assuming that everything goes as planned–Page and Brin will control less than half of the voting power of Google shares, according to a filing with the U.S. Securities and Exchange Commission. “Today, we disclosed that Larry and Sergey have entered into plans to sell 5 million Google shares, each over the next five years–these shares represent about 17 of their overall Google holdings,” Google said in an e-mailed declaration. “They are both as committed as ever to Google and are integrally involved in our day-to-day management and product strategy. The majority of their net worth leftovers with Google. These pre-arranged stock-trading plans were adopted in order to allow Larry and Sergey to sell a portion of their Google stock over time as part of their own long-term strategies for individual asset diversification and liquidity.” Google created a dual-class stock structure when it filed for an first public offering in 2004. Class A shares are the ones that were offered to the public, yielding the owner the value of one vote for one share. Class B shares, owned by Brin, Page, CEO Eric Schmidt, directors, early investors, and key managers, grant their owners 10 votes per share. Page and Brin currently control 59 percent of the voting power of Google’s stock, according to Friday’s filing. By the time they have disposed of all the shares involved in the plan, they will control 48 percent of the voting power of Google’s stock. Now, according to Google’s 2009 proxy statement, Schmidt owns enough Class B shares to control 9.5 percent of the voting power, so the triumvirate that runs Google still controls more than 50 percent of the voting rights. And when you add up directors and key managers, Google insiders at present own sufficient stock to control 70.9 percent of the voting rights associated with Google’s stock, according to the same proxy statement. Still, the voting rights currently possessed by the founders could theoretically allow the two to push through basically any corporate rule that regular shareholders might not like, such as the company’s decision to present the Chinese government with an ultimatum over censorship two weeks ago. In fact, Google warned prospective shareholders of that intention in 2004, saying in their IPO letter that “new investors will fully split in Google’s long-term economic future but will have little ability to influence its strategic choice through their voting rights.” In the real world, such a showdown flanked by shareholders almost never happens. But should all go according to plan, by 2014, it will still be a milestone for Google

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S.No:        101t
Topic:        technology
News Title:        Google creators to sell stock, cede majority control by 2014
News Detail:        By 2014, Google founders Larry Page and Sergey Brin will have sold enough of their stock to give up majority control of the company, Google declare Friday evening. In November, Page and Brin entered long-term stock disposal agreements, a very common move designed to give uber-rich executives the aptitude to diversify their portfolios over time without scaring the stock market. But what’s significant about this particular plan is that by the end of it–assuming that everything goes as planned–Page and Brin will control less than half of the voting power of Google shares, according to a filing with the U.S. Securities and Exchange Commission. “Today, we disclosed that Larry and Sergey have entered into plans to sell 5 million Google shares, each over the next five years–these shares represent about 17 of their overall Google holdings,” Google said in an e-mailed declaration. “They are both as committed as ever to Google and are integrally involved in our day-to-day management and product strategy. The majority of their net worth leftovers with Google. These pre-arranged stock-trading plans were adopted in order to allow Larry and Sergey to sell a portion of their Google stock over time as part of their own long-term strategies for individual asset diversification and liquidity.” Google created a dual-class stock structure when it filed for an first public offering in 2004. Class A shares are the ones that were offered to the public, yielding the owner the value of one vote for one share. Class B shares, owned by Brin, Page, CEO Eric Schmidt, directors, early investors, and key managers, grant their owners 10 votes per share. Page and Brin currently control 59 percent of the voting power of Google’s stock, according to Friday’s filing. By the time they have disposed of all the shares involved in the plan, they will control 48 percent of the voting power of Google’s stock. Now, according to Google’s 2009 proxy statement, Schmidt owns enough Class B shares to control 9.5 percent of the voting power, so the triumvirate that runs Google still controls more than 50 percent of the voting rights. And when you add up directors and key managers, Google insiders at present own sufficient stock to control 70.9 percent of the voting rights associated with Google’s stock, according to the same proxy statement. Still, the voting rights currently possessed by the founders could theoretically allow the two to push through basically any corporate rule that regular shareholders might not like, such as the company’s decision to present the Chinese government with an ultimatum over censorship two weeks ago. In fact, Google warned prospective shareholders of that intention in 2004, saying in their IPO letter that “new investors will fully split in Google’s long-term economic future but will have little ability to influence its strategic choice through their voting rights.” In the real world, such a showdown flanked by shareholders almost never happens. But should all go according to plan, by 2014, it will still be a milestone for Google.

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