Shareholder Voting Rights

Ride sharing startup Lyft’s move to the public market, has rekindled the issue of shareholder voting rights.  Lyft’s plan for dual-class voting shares has caught the attention of pension funds, which suggests that investors should be aware that corporate governance is not a one-man one-vote democracy.

Lyft co-founders will receive 20 votes per share while other common stockholders will get one-for-one.  We have previously addressed the issue of dual-class shares that give insiders or family owners corporate control, in blogs dated 15 Mar 2017 and 7 Jul 2017.

While the issue of dual-class shares remains controversial, the obvious solution for investors who are concerned about corporate governance is, don’t invest in companies with a dual-class structure.

For the record, Sigma is opposed to corporate strategies that limit or otherwise reduce public shareholder rights.

All comments and suggestions are welcome.

Walter J. Kirchberger, CFA