By John Morlu, CPA.
The stock market is a curious beast—equal parts financial playground, gladiator arena, and magician’s stage, where fortunes are built and erased with the flick of a trade, and the impossible often seems to happen before your very eyes.
In this arena of high stakes and fierce competition, there are winners and losers, but also those who seem to defy the very rules of the game. It’s a world where success can come overnight, fortunes can vanish in the blink of an eye, and—if you’re clever enough—you can control an entire empire without actually owning much of it.
Among the most fascinating tricks pulled off in this world is the “dual-class share” structure, a brilliant yet controversial financial maneuver that allows founders and a select few to hold on to power—often indefinitely—while selling off large portions of their companies.
Think of it as the corporate version of having your cake and eating it too, except you also get to keep the bakery. This structure has produced some of the most riveting and head-scratching stories in the world of corporate governance, where the balance of power is delicately engineered to favor the few, no matter how much the many may invest.
But make no mistake, this isn’t just a niche financial quirk—it’s a key ingredient in the rise of some of the biggest, most influential companies in the world. From tech giants to media empires, the use of dual-class shares has enabled founders to maintain control long after they’ve cashed in on their success, steering their companies with singular vision (and sometimes ego) while investors are left holding stock with limited voting power.
It’s a system designed for founders to retain control, whether the company flourishes or falters. In this world, investors might supply the capital, but it’s the founders who hold the keys to the kingdom. Whether you think that’s a genius move or a breach of shareholder democracy, one thing is certain: dual-class shares are changing the way modern corporations are run—and they’ve become a lightning rod for debate in boardrooms and among investors.
So, why do some of the world’s most powerful companies, from tech titans like Meta (formerly Facebook) to media powerhouses like The New York Times, swear by dual-class shares? And why are more investors clamoring for “sunset clauses”—a ticking clock on how long founders can maintain their iron grip on the companies they once started?
We’re about to take a deep dive into a world where control isn’t just a goal—it’s an obsession. A place were founders of startups morph into modern-day emperors, ruling over their corporate empires with little regard for the voices of the common shareholders. You’ll see how, in the jungle of the stock market, dual-class shares are the predator at the top of the food chain—allowing the powerful to thrive with very little ownership while the masses can only hope for the occasional dividend.
If you’ve ever been curious about how some of the world’s most iconic CEOs—like Mark Zuckerberg, Larry Page, or Jack Ma—manage to hold onto their power with so little actual stock in their companies, you’re in for a wild ride.
Grab your popcorn (maybe even a calculator), settle in, and let’s journey into the fascinating, sometimes bewildering, and always controversial world of dual-class shares. You’ll learn how this corporate structure works, why it’s beloved by some, despised by others, and how it’s reshaping the corporate landscape across industries—from tech to media to manufacturing.
By the time we’re done, you’ll not only understand how the rich and powerful stay in control, but you might also have a few chuckles along the way. After all, in the world of dual-class shares, irony and intrigue are never far behind. Ready? Let’s dive in.
Chapter 1: What Are Dual-Class Shares?
Before we venture into the zany world of corporate hijinks, let’s start by defining the villain of our story: dual-class shares. Think of it like showing up to a potluck where everyone brings something to the table. You walk in with your carefully prepared side dish, and as you find a seat, you realize the host has a golden spoon and can eat 10 times more than everyone else, while you’re stuck with a plastic fork and a single nibble. Welcome to dual-class shares: where not all shareholders are created equal.
In this setup, companies issue two (or more) types of stock, most commonly labeled as Class A and Class B. The catch? The voting power between them is as lopsided as your family’s Thanksgiving debate about politics. Class A might offer you one humble vote per share, while Class B—reserved for founders, insiders, or corporate royalty—could wield 10 votes per share. It’s like trying to argue with someone on Twitter who has a megaphone while you’re whispering into a pillow.
Case Study: Facebook (Meta)
Take Mark Zuckerberg, for example. He owns just a slice of Meta’s stock pie, but with his special Class B shares, he’s practically running a corporate monarchy. Mark has 10 votes per share, and the rest of the investors are left with one. It’s like inviting you to a company picnic, but Zuck gets to pick the music, food, and whether you even get a plate.
In Zuckerberg’s world, shareholders are like enthusiastic soccer fans watching a game—they can cheer, they can boo, but when it comes to making plays on the field, they might as well be in the parking lot.
In Summary: Dual-class shares are like being invited to a wedding where you pay for your meal, but only the bride and groom get to decide the venue, the menu, and whether you’re seated next to Aunt Karen.
Chapter 2: The Purpose—When You Want to Sell but Still Control
Ah, the sweet allure of dual-class shares: selling stock without losing control. It’s like pawning off your house to raise money but keeping the key to the front door—and the deed—and, while you’re at it, making sure you still get to choose what color to paint the living room.
This structure is perfect for founders who want to swim in a pool of public capital but don’t want anyone else peeking at the pool filter. They want the investment, the cash, the market validation—but when it comes to who’s in charge, it’s still very much their show. Imagine being able to quit your job but still have the power to boss your replacement around. Neat, huh?
Example #1: Alphabet (formerly Google)
Larry Page and Sergey Brin of Google fame were way ahead of the curve. When they took Alphabet public, they made sure to retain full control with their super-voting Class B shares. They might have sold off shares to the public, but in the boardroom, it’s still their ballgame. In fact, they can choose who gets to sit on the bench and who even gets to watch.
For Alphabet’s shareholders, it’s like buying a Ferrari but being told you can only drive it on weekends—and even then, only in reverse.
Example #2: Snap Inc.
And then there’s Snap Inc., the company that took this whole concept to an even more absurd level. When they went public, they told investors, “Hey, give us your money, but you get no votes.” Zero. Nada. Imagine paying for a ticket to a concert where the band gets to decide whether you even hear the music. Snap’s IPO was basically that. But hey, as long as your Snapchat streak is alive, right?
Example #3: Ford
Even Ford, the classic American automaker, isn’t immune to the allure of dual-class shares. The Ford family, thanks to their magic shares, owns a measly 4% of the company but controls 40% of the voting power. It’s like being part of a democracy where one person gets 10 votes because their great-great-grandfather built the town’s first saloon. Nepotism? Sure. Genius? Absolutely.
