Vote guarantees founder retains 40% voting power
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Shareholders of e-commerce company Shopify Inc., whose stock soared early in the COVID-19 pandemic but later gave up much of those gains, have approved a novel share structure that will guarantee chief executive Tobi Lütke retains 40 per cent voting power through a newly created “founder” share.
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The resolution, presented at the Ottawa-based company’s annual meeting Tuesday, had to be approved by not less than two-thirds of votes cast by shareholders voting together as a single class, and a majority excluding shares directly or indirectly held by the CEO and his family and affiliates.
Based on a preliminary tabulation of votes at the meeting and proxies, it did so.
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The particulars of Shopify’s new share structure were without precedent in corporate governance, according to Richard Leblanc, a professor of governance, law and ethics at York University.
In April, when Shopify proposed adding the new share class to its Class A stock, which carries one vote per share, and Class B shares that carry 10 votes each, the company said it was intended to “strengthen the foundation for long-term stewardship by Mr. Lütke, a proven leader who has delivered significant shareholder value since the… IPO.”
