"One share, one vote" remains the bedrock principle for corporate governance aficionados the world over, even as a growing chorus of voices has argued that superior mixes of economic and voting rights for shareholders can lead to greater wealth creation.
" 'One share, one vote' has been a shareholder mantra, but the landscape has changed dramatically" in recent years, said John Roe, managing director and head of analytics at Institutional Shareholder Services, Rockville, Md.
"Since the financial crisis in 2008, there has been (a) resurgence in the promotion and use of differential ownership and control structures in many markets" including the U.S., European Union, China and Brazil, according to a February 2017 paper by the International Corporate Governance Network.
In France, for example, "loyal" long-term shareholders of two to three years can get two votes for every one from shorter-term shareholders; in the U.S., the focus is more on insiders vs. outsiders, with insiders often getting 10 votes to every one for outsiders, Mr. Roe said.
"A very worrying trend," in the U.S. is the increased weight of companies with dual-share classes, now at 12% of the S&P 500 index market capitalization compared with 5% in 2007, said Lynn S. Blake, a Boston-based executive vice president with State Street Global Advisors and the firm's chief investment officer, global equity beta solutions.
Proponents of dual-class share structures cite "short-termism" in financial markets as the driving force behind departures from the 'one share, one vote' standard. Dual-class shares shield management from market forces and shareholder activism too focused on short-term gains, paving the way for long-term value creation, they contend.
Snap Inc., the Los Angeles company that raised corporate governance hackles with its March 2 listing of strictly non-voting shares — a symbolic step beyond the '10 votes for me, one vote for you' share structures of prior high-profile tech listings — struck those notes in its pitch to investors.