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Dual class shares, decoupling voting and economics rights

Dual class shares are a great way for a company to keep the vision of the business and execute in the best interest of all stakeholders. Look at some of the best managed companies and with the best ROI & ROE. They are very clear. Decouple vision and execution so as not to be hostage of analysts, shareholders and anyone with one share in the business disrupting what is in the best interest of the ecosystem. So whether the business fails or succeeds, the vision, execution are decoupled from externalities that see most executives, companies and businesses fail due to shareholder pressure on stock price, rather than what the business needs.

Zuckerberg to sell Facebook shares worth about $2.3 billion
Thu Dec 19, 2013 7:05am EST
http://www.reuters.com/article/2013/12/19/us-facebook-offering-idUSBRE9BI0H820131219?feedType=RSS&feedName=technologyNews

“Facebook said it expects Zuckerberg to use most of the net proceeds from the sale to satisfy taxes related to the exercise of an option to buy 60 million Class B shares.Each Class A share is entitled to one vote, while Class B shares are entitled to 10 votes and are convertible at any time into one Class A share”

Letter From the Founders
A letter from Google’s founders that was included in the company’s IPO filing.
http://online.wsj.com/news/articles/SB108326432110097510

The Two Sides Of Dual-Class Shares
http://www.investopedia.com/articles/fundamental/04/092204.asp

BERKSHIRE HATHAWAY INC. AN OWNER’S MANUAL*
A Message from Warren E. Buffett, Chairman and CEO
January 1999
http://www.berkshirehathaway.com/owners.html

Sorry CalPERS, Dual Class Shares Are A Founder’s Best Friend
http://www.forbes.com/sites/ciocentral/2013/05/14/sorry-calpers-dual-class-shares-are-a-founders-best-friend/

DUAL-CLASS SHARES: GOVERNANCE, RISKS, AND REWARDS
http://iveybusinessjournal.com/topics/leadership/dual-class-shares-governance-risks-and-rewards#.UrLu2ZEmdH0

Dear Rupert Murdoch: Please Eliminate Your Company’s Dual-Class Share Structure
http://www.ibtimes.com/dear-rupert-murdoch-please-eliminate-your-companys-dual-class-share-structure-1428872

This way whether you are a startup or a listed company, the executive team and the board stay focussed on the fundamentals of the business and work towards creating value for all stakeholders. If investors believe in the team and business, they invest, else they stay divested. At the core will always be governance and execution that differentiates the most valuable companies from the rest.

So next time you start a company, invest or mentor, structure the equity from day one to ensure the longevity of the business and it’s execution is decoupled from economic rights so you can take the bull by the horns for the performance of the business.

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