Google doubled the number of outstanding shares available Thursday to ensure that founders Larry Page and Sergey Brin maintain control of the company for years to come. The maneuver, called a stock split, will make it difficult for investors to gain a significant voting stake in the company.
Before Thursday, Google’s stock was split among Class A shares, which are publicly traded and worth one vote each, and Class B shares, which are held by early Googlers such as Page and Brin and are worth 10 votes each. The split doubled the number of available shares by halving the price of the stock and creating a new, non-voting category called Class C shares. The overall value of Google stock remains unchanged, but current investors will now own equal amounts of voting and non-voting shares.
With a huge pool of non-voting stock, Google will now be able to issue stock options to employees and complete acquisitions that are paid partially in stock without diluting the power of Page and Brin, who together control 56 percent of the vote at the company’s annual shareholders meeting. The deal will also make it more difficult for activist investors like Carl Icahn to swoop in and buy up enough voting shares to exert significant control over the company. Some have criticized the split, saying that the creation of a class of non-voting shareholders flies in the face of Google’s “don’t be evil” mantra. Investors originally sued to prevent the split, which was announced nearly two years ago, but Google settled before the case went to trial.
Both the Class A and Class C shares rose slightly in trading after the split, with the Class A shares fetching about a $2 premium when markets closed Thursday.