Thursday, July 16, 2020

Brin and Page Maintain Close Control of Google with Unconventional Stock Split

March 18th, 12:25 am
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Google Inc.’s (NASDAQ: GOOG) upcoming unconventional stock split will enable Co-founder Sergey Brin and Larry Page to maintain close control over the company. The stock split will diminish shareholders voices and modify how the company is represented in the S&P 500 index.

The Addition of Class C Shares

On April 2, Google announced that they will pay a dividend of Class C stock to individuals holding Class A and Class B shares of outstanding stock. The company’s class A shares carry one vote per share and class B shares receive ten votes. The new class C shares will carry no voting rights.

The S&P Dow Jones Indices Reshuffle the S&P 500

The S&P Dow Jones Indices originally stated that the index provider would replace Google’s class A shares with class shares in the S&P 500. On March 11, the S&P Dow Jones said it would include class A and C shares of Google in the S&P 500. This means that the S&P 500 will have 501 stocks, representing 500 companies. The index is adding criteria for future interactions with companies issuing new classes of stock. The criteria will include liquidity and material level tests.

Stock Actions

Shares of Google have heavily relied on Standard & Poor’s decision to replace or include the two classes of shares on the S&P 500. The stock is trending slightly down for the month following the S&P Dow Jones Indices to include class A and C shares when Google shares reached $1,207.30. On Friday, shares closed at $1,172.80 and are currently up 1.81% at $1,194.03.

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