Google strongmen Page, Brin tighten iron grip with strategic stock split
New class of shares approved, but lawsuits may delay split until October
Google CEO Larry Page may have temporarily lost his voice this week, but the unusual stock split approved by shareholders of the search giant on Thursday spoke volumes -- this guy is power mad!
And it's not just Page. Google co-founder Sergey Brin also solidifies his voting power as a major shareholder through the stock split.
Not that there was any danger of a shareholder uprising to overrule decisions made by Page, Brin and Google chairman Eric Schmidt, who collectively control two-thirds of the company's voting shares.
But as Facebook Field Marshall Mark Zuckerberg has shown us, there's no such thing as too much power. (Coming soon: Google announces formation of own armed forces, buys fighter jet on eBay.)
The Associated Press's Michael Liedtke explains the insidious strategy behind the stock split:
To preserve their power, Page and Brin persuaded Google's board to approve a new class of non-voting stock. Google can draw upon this new "C'' class of shares without diluting Page and Brin, who currently hold a combined 56 percent of the voting power at the company.
The plan calls for a share of Class C stock to be given for every share of the existing Class A stock. That has the effect of cutting the value of each Class A share in half while doubling the total owned by each stockholder.
So there's no overall loss of value to shareholders', um, holdings, but that doesn't mean everyone was on board with the Big Three. Two shareholder lawsuits still working their way through a Delaware court could delay the split until October at the earliest. The suits allege Google's directors breached their fiduciary duty by approving the lame, toothless "C" shares.
The lawsuits demand that the stock split be halted and also seek monetary damages. Sounds like a settlement.