Google Settles Class Action Lawsuit Over Nonvoting Stock
Search giant Google has settled a class action lawsuit related to its issuance last year of Class C common stock, a move that was widely considered unfriendly to existing shareholders. Google filed notice of the settlement with the SEC today.
The Class C shares are intended to be used for equity compensation and other purposes, but do not include voting rights. The new class gave Google's co-founders Larry Page and Sergey Brin even more voting control.
As part of the settlement, if Google wants to use more than 10 million Class C shares as currency in an acquisition, independent directors will consider how that may impact existing Class A shareholders and the company at large. If Page and Brin's combined voting control falls below 15%, the board will look to convert Class C shares to Class A shares if it no longer considers the nonvoting class to be in the best interests of the company and its shareholders. Google's most recent proxy statement shows that Page and Brin collectively command 56.1% of total voting power, thanks primarily to large holdings of Class B shares that get 10 votes per share (Class A shares get 1 vote per share).
Google will also compensate Class C shareholders if the Class C share price is at least 1% lower than the Class A share price.
The article Google Settles Class Action Lawsuit Over Nonvoting Stock originally appeared on Fool.com.
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