Google tries again to implement conservation measures to control Larry Page and Sergey Brin in the company, proposing shareholders the creation of a new class of shares that would allow the issuance of new debt without founders risking diluting their voting power, says Bloomberg.
The measures advanced Thursday night by the company that controls largest internet search engine and the largest online advertising business is a cause for alarm for organizations that promote fairness in corporate governance, who fear that the new structure will remove even more Google shareholders from the decisional making process. Changing the ownership structure would create a new class of securities without voting rights attached.
Page and Brin have not hidden the intentions to preserve their influence upon the company even after its listing on the stock exchange market in 2004, and the founders will retain control despite Google’s expansion. This new class of shares, the third in the Google structure, would allow the founders to compensate employees or to make purchases through capital exchange without diluting their voting rights. Shareholders should therefore be removed from the decisional process, considers Charles Elson, director of the Center for Corporate Governance University John L. Weinberg from Delaware University. "The voting rights of shareholders are quite limited to Google. And this measure perpetuates the reality," comments Elson Bloomberg.
Along with the board’s executive chairman, Eric Schmidt, Google cofounders controls about two thirds of the voting rights of ownership, influence preserved after the company’s IPO in 2004, through a structure on two share classes. Class A had already reduced the voting rights and Class C shareholders proposed Thursday night, will not provide this privilege at all.
Initially, the structure with two stock classes was introduced to protect the company from outside pressure in case of potential risky investments as taking over YouTube or launching Android operating system smartphones and tablet PCs, notes Page and Brin in a company press release on Thursday. New changes to the structure, reinforces the protection mechanisms, according to Google. The announcement was presented simultaneously with the company’s financial report for the first quarter of this year.
Google’s revenue increased in the first quarter by 24% compared to the corresponding period last year, from $ 8.57 billion from $ 10.64 billion, while net profit climbed 60%, from about 1.8 billion to $ 2.9 billion dollars.