What multi-class share arrangement say about shareholder

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Reference no: EM132761516

Alphabet has three classes of stock, A shares: GOOGL, B shares (which are owned by insiders and do not trade on the public markets), and C shares: GOOG. Class A shares get 1 vote, B shares get 10 votes and C shares get no voting rights. (C shares are a result of a stock split of A shares. Class A shareholders - at the time of the split - were given a C share, but it came with no voting rights.) There are ~300 million A shares outstanding, ~50 million B shares, and ~350 million C shares. For what it's worth, the company continues to issue C shares to finance acquisitions and reward employees.

Problem (a) Look at the prices of A and C shares. Is there a premium to hold A shares vs. C shares? What is the value, in dollars, of the voting power that comes with A shares? This answer requires a limited amount of investigation.

Problem (b) What does the multi-class share arrangement say about shareholder voting power? How does this impact your view of the power of management, the board, and shareholders?

Reference no: EM132761516

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