Class A Shares

Think about the benefits of flying first class. You pay extra to get some perks (champagne cocktails, a fresh baked cookie). That's similar to buying Class A stock.

Class A shares offer more benefits than Class B shares. They can be either common or preferred stock in a company. The benefits of Class A shares might include greater voting rights and a higher priority to receive dividends. Many companies give their executives Class A shares in order to give them more power in regard to voting rights on the off chance there is a hostile takeover attempt.

The other perk to owning Class A shares is if the company should happen to go out of business and liquidate, Class A shareholders would get their cash first.

So, if Cassie is trying to decide whether to buy Class A or Class B shares of We Have Class Inc., she reads over the company bylaws and prospectus. She finds out she will get five votes instead of one with the Class A shares, and will receive first priority when dividends are handed out. Since the Class B shares are 27 cents cheaper per share, Cassie decides to go with the Class B shares since she can get 18% more shares for the same amount of money, and the voting rights aren’t all that important to her. She will keep fingers crossed that she will get the same dividend as the Class A holders.