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Benzinga
Benzinga
Anusuya Lahiri

Here's How Shopify Chief Looks To Preserve Control

  • 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.
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