Google Inc. settled a lawsuit brought by the Brockton (Mass.) Contributory Retirement System over the company's plan for a stock split that shareholders claimed would unfairly allow founders Larry Page and Sergey Brin to strengthen their corporate control.
Under the tentative settlement, which must be approved by a judge, amendments of stock policies will require advance warning, increases in voting control for Messrs. Page and Brin will trigger enhanced scrutiny, and plaintiffs' lawyers will get “reasonable” fees and expenses.
Lawyers for the $337 million Brockton pension fund and other investors were scheduled to begin presenting testimony on Tuesday in a Delaware court about a stock reclassification to create a new class of non-voting shares, court filings show.
Unhappy shareholders contended Messrs. Page and Brin were wrongly trying to entrench their control of Google.
“The case boils down to whether Page and Brin are getting something in the reclassification that comes at the expense of other Google shareholders,” Larry Hamermesh, a Widener University law professor who specializes in Delaware corporate law issues, said in an interview.
Google's lawyers said in pretrial court filings that the new shares were designed to increase the company's flexibility in making acquisitions and rewarding employees while properly allowing Messrs. Page and Brin to maintain control of the company they started in 1998.