Shopify’s plan to give “founder” shares to Chief Executive Officer Toby Lutke has been opposed by the shareholder advisory firm Institutional Shareholder Services (ISS).
On April 11, e-commerce company Shopify (ticker: SHOP) proposed to CEOs to issue founder shares, a new category of stock. The Founder Shares would provide the loser with a convertible number of votes that, when combined with their Class B shares and those owned by their immediate family and associates, would represent 40% of the total voting power associated with all outstanding shares of the Company, According to Shopify,
In a report sent to the ISS on Wednesday baron’sThe shareholder advisory firm said, “Vote against the creation of the founder share because it does not satisfy the exceptional circumstances under which such a multi-class share structure may be considered appropriate in the Canadian market.”
The ISS also noted in the report that the proposed new capital structure does not substantially enhance the rights of minority shareholders.
Shareholder advisory firm Glass Lewis & Company also opposed the founder share offer earlier this week. in the report sent to baron’s, the advisory firm recommended that shareholders vote against the proposal. “The Board and the Special Committee took a highly concessional approach to Mr Lutke in agreeing to this arrangement at the expense of the scattered minority shareholders,” it said.
Shopify’s board, based on the recommendation of the Special Committee, unanimously recommends that shareholders vote in favor of the proposal, according to the company.
Shares of US-listed Shopify rose 2.9% to $334.15 on Wednesday after falling nearly 12% on Tuesday. The stock has fallen more than 70% in 2022.
Write to Angela Palumbo at [email protected]
Credit: www.marketwatch.com /