“One-share, one-vote,” a bedrock principle of Anglo-Saxon corporate governance, is back in the spotlight. Except this time the aim is to diminish its application rather than to extend its global footprint. Rising short-termism among investors — which threatens to destabilize both companies and the wider economy — is prompting a reconsideration of the principle that all shareholders should have equal say.
Prominent commentators such as former U.S. Vice President Al Gore, McKinsey Managing Director Dominic Barton and blog, and Vanguard Group founder John Bogle have advocated bolstering the voting rights of long-term shareholders or, conversely, withholding them from short-term investors. Significantly, the Financial Times reported last week that the European Commission was preparing a proposal to give “loyal” shareholders extra voting influence.
Seeking insulation from near-term pressures, Facebook, LinkedIn, Groupon, and other Silicon Valley outfits went public in recent years with dual-class shares that gave their founders — believed to be the most committed to their long-term success — voting power of up to 150 times greater than those accorded outside investors. Google, which adopted a similar share structure at the time of its initial public offering in 2004, has gone further with its decision last spring to issue non-voting stock.