Class Of Shares

When companies go public, the founders and/or current management often wish to maintain voting control as to the business direction of the company, and not entertain the possibility of losing decision-making power, especially when they no longer have a mathematical majority due to dilution.

Alphabet (nee Google) is a perfect example. While regular shareholders own Class A common stock, with 1 vote per share, Brin and Page, Google’s founders, own Class B stock, which are worth 10 votes per share. Employees receive voteless Class C shares as part of their compensation.

Mutual Funds may also have different classes of shares, such as individual or Admiral shares, each with a fee tacked on at the buy or the sell.

Preferred shares are a form of debt that is categorized as equity on the corporate balance sheet. Usually voteless and coupon bearing, they are often convertible into common stock at a specific ratio.