Zynga and Groupon have already made waves with their unusual accounting metrics revealed in the original IPO filings. Now, however, potential investors are giving attention to the extra-supervoting shares granted to the company founders.
When Groupon goes public, they plan on granting three co-founders will have shares that carry 150 votes each and when Zynga similarly goes public, founder Mark Pincus’ supervoting shares will carry 70 votes each. By contrast, regular investors will have only one vote per share in corporate matters.
While the two tier system is not atypical at larger companies, supervotes are more typical at 10 votes apiece at companies like Facebook, Google, and LinkedIn. In Pincus’ case, he wants the increased voting power because he only held 15 percent of Support.com’s stock after it went public in 2000 compared to 30 percent for venture capitalists.
For Zynga, Pincus wants to control more of the company when it goes public. While Zynga’s five VC investors will hold a combined economic stake greater than Pincus’, he will hold a larger percentage of the company’s votes.
Investors aren’t pleased in this, running under the belief that these founders, “will continue to run it as their own company,” corporate-governance program manager Michael Garland. “We believe in one-share, one-vote.”
Source: WSJ