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.
Related or Semi-related Video
Finance: What is non-voting stock?4 Views
finance a la shmoop- what is non-voting stock? hmm well it's stock that doesn't
vote. bet you're shocked to hear that. most people need a PhD in finance to [stock wears an "I didn't vote" sticker.
understand that notion. but really that's it in most cases common stock carries
with it the right to vote. and in fact it's the common shareholders who elect
the board of directors. but every now and then a potentially hostile investor
comes along and buys or wants to buy a big chunk of stock in a company. well the
amount might be a block large enough to elect that potentially hostile investor
slate or the group of people that investor wants to place on the board to
represent her evil intentions .when that happens companies will often create a
class of common stock similar in every way to its normal common only with its [stock checklist of privileges listed]
voting rights stripped away .that way the investor can own an economic interest in
the company but not monkey with the board.
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