- Shopify Inc (NYSE:SHOP) sought approval to change its complex share structure to protect the voting power, including a 10-for-1 stock split, the Wall Street Journal reports.
- Co-founder and CEO Tobi Lütke proposed a new “founder share” that, combined with his existing supervoting Class B shares, increased his voting power to 40% from 34%.
- Lütke, 41, looked to retain the shares as long as he remained at Shopify.
- Lütke looked to preserve control of the company by the move, said Robert Ashe, Shopify’s independent lead director.
- The stock split made it easier to compensate employees and allow more individual investors access to the stock.
- Shopify employees could choose between cash and stock in compensation packages.
- Upon approval, Lütke will be able to hold the 40% voting control even if he sold a significant amount of his Class B shares.
- The e-commerce company’s shares, which surged above $1,600 in 2021 during the pandemic, have fallen about 55% so far in 2022.
- Under the current structure, if the proportion of supervoting Class B shares dropped below 5% of total shares outstanding, they would automatically convert to Class A shares, with any equity issuance for financing or acquisitions posing a threat to Lütke’s control.
- Price Action: SHOP shares closed higher by 2.49% at $618.20 on Monday.
