Shopify is planning a 10-for-1 stock split, eyes 'founder share' to protect CEO's voting power
April 12, 2022: -On Monday, eCommerce start-up Shopify said it is planning a 10-for-1 stock split while seeking shareholder approval for a “founder share” for its CEO Tobi Lutke to surge his voting power.
Upon shareholders’ approval, Shopify is going to authorize and issue a new class of non-transferable founder shares to Lutke, which gives the executive a total voting power of 40% when combined with his present Class B shares.
“Tobi is key to supporting and executing Shopify’s strategic vision. This proposal ensures his interests are aligned with long-term shareholder value creation,” Robert Ashe, Shopify’s lead independent director, said. Shopify shares increased more than 1.5% in the premarket on Monday.
The Ottawa-based company got a big boost over the previous two years, as the firm helped small businesses quickly move operations online in the pandemic’s forced shutdowns. The stock soared nearly 185% in 2020 and another 21% in 2021. Although, shares have fallen more than 50% year to date as the pandemic boost faded.
The proposed 10-for-1 split of Shopify’s Class A and Class B shares is subject to two-thirds of the shareholder votes. If approved, investors will receive nine additional Class A shares or Class B shares for every one share held after the close of business on June 28.
The company said the stock split makes share ownership more accessible to all investors. Many Big Tech companies, including Amazon, Alphabet, and Tesla, are announcing similar moves in the latest weeks.
A stock split theoretically could boost retail share ownership as the lower stock price is more accessible to a broader range of investors. Although, it doesn’t change a company’s underlying fundamentals or the intrinsic value of its shares.
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