You're describing the opposite scenario. Generally it's the founders who get a special class of shares which allows them to retain control over the company even when they own <5% of the stock. Without that the company becomes controlled by Wall St. who appoint the MBA to loot and pillage.
The MBAs get there often because it's who the board picks when the founder retires.
The main thing the special class of shares does is make it hard for them to oust the founder when the founder doesn't want to retire. Once they choose to, they either use their special votes to choose a worthy successor, or they stop caring and you get the default MBA you'd have had regardless.
> Honestly this arrangement (total comp aside) is how it should be for all these companies.
It's difficult to say based on the actual data in the past 10 years. The companies with dual shares seem to do well if we look at the companies of the same sizes.
Fair, I just remember the backlash to the FB arrangement more I guess. At least in the case of the Google Class B shares control was split between the two, but still, in my opinion, wildly inappropriate for the purpose of public markets.
I may have an antiquated view of how the capital market should work given how long I’ve worked in the space, but I’m strongly of the opinion that going public should be synonymous with surrendering private/individual control of the company. The company is effectively spreading the risk of failure, and I think the average investor doesn’t appreciate or understand the voting vs non-voting differentiation.
Then again there is a monstrous amount retail participants in the market don’t understand and frankly the SEC has done (in permitting these sorts of listings) a poor job of executing on its mandate.
There's certainly a hypothetical principal-agent risk if someone holds voting power / control without holding any financial risk. In practice, holders of preferred voting power shares usually also have financial interests at stake, and thus are aligned with long-term financial interests.
Proposals that forbid holding control shares without parallel financial interests are more compelling than proposals to outlaw multiple share classes in public companies in general, but again, I think you'd be hard-pressed to find cases where having the law would force de-facto changes, and then the question becomes whether the law is worth its compliance costs.
When you buy a fund, you’re choosing its management strategy (including about votes). If you don’t feel a fund represents your interests well, don’t buy it.
Sometimes your employer gives you a list of a couple dozen funds run by the same manager, and if you want your employer to contribute to your retirement savings, those are the options.
I'm all for banning these super-voting companies from the 401K/index funds. But you should know that many poor and average people would've missed those superb returns.
I'm not against forbidding index/401K funds from investing in those companies since many people (including you) deem those companies as "bad".
Many average people don't actively manage their funds. They would've missed out on the benefits, but that's okay. Having shareholder voting power is more important for them, I suppose. While I disagree, I might have voted for it. Because this would've translated to less competition for house and stuff.
It's not really surprising that companies that print huge amounts of money with fairly little need for funding do well.
The scenario in which dual-share structures can be a problem is if things don't go well. Specifically they greatly limit the shareholder's ability to protect their investment by removing the CEO. That's why it's considered poor governance.
In the end it comes down to leverage, Zuck famously didn’t sell early so people were pounding down the door to invest when they finally got the opportunity.
I understand Zuck made many failed bets but he had a few big bets paid off. And those big bets paid off so well that FB is a $1.4 trillion company.
It's like people here are still stuck in school where you have to score A+ on every subject.
Honestly this arrangement (total comp aside) is how it should be for all these companies. When Facebook went public the dual class structure (and Zuck retaining voting control) was a big point of contention.