Business

Shopify plans a stock split and tries to keep the chief’s voting rights

Canadian e-commerce group Shopify has proposed a 10-for-1 stock split and unveiled a plan to protect the voting rights of founder and CEO Tobi Lutke.

The plan, recommended by the Canada Group’s board of directors, requires a two-thirds majority of shareholders to approve it.

Shopify currently has Class A shares with one vote each and Class B shares with 10 votes each. This gives Class B shareholders a majority stake with about 51 percent of the voting rights, the group said in its statement on Monday.

Shopify is the latest tech company to announce a stock split Amazon, alphabet and Tesla. Stock splits are largely cosmetic, multiplying the total number of shares and reducing the value of each individual share. However, the move helps make companies more attractive to retail investors.

“The shift to digital commerce has accelerated over the past two years,” said Robert Ashe, senior independent director. The board has “undertaken a thorough review of Shopify’s governance structure to ensure the company is best positioned to capitalize on tremendous opportunities for continued growth and value creation,” he added.

Shopify will authorize and issue a non-transferable founder’s share to Lutke, which will give him a variable number of votes, as part of its recent proposal to update its governance structure.

This, together with the shares he and his immediate family and affiliated companies own, will set and maintain his voting rights at 40 percent of the Group’s total outstanding shares. Lutke retains this founder’s share as long as he is a member of the company’s board of directors, board member or consultant.

“Tobi is key to supporting and executing Shopify’s strategic vision, and this proposal ensures his interests are aligned with creating long-term shareholder value,” added Ashe.

Shopify’s services enable brands and independent stores to sell directly to customers through their own websites or social platforms like Instagram, as an alternative to trading through Amazon or other marketplaces.

Shopify’s shares are up about 1.5 percent to $612 in premarket trading.

https://www.ft.com/content/df2175da-833c-47d8-976b-0c75b686efc0 Shopify plans a stock split and tries to keep the chief’s voting rights

Adam Bradshaw

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