Business

Stock Split Could Cost Google Over $500 Million

Published

10 years ago

April 2, 2015

In this Dec. 12, 2013 file photo, Google co-founder Sergey Brin arrives for the Breakthrough Prize in Life Sciences awards in Moffett Field, Calif. Google may have to pay more than half a billion dollars for an unorthodox stock split aimed at ensuring co-founders Brin and Larry Page retain control over the Internets most profitable company. (AP Photo/Ben Margot, File)

MICHAEL LIEDTKE, AP Technology Writer

SAN FRANCISCO (AP) — An unorthodox stock split designed to ensure Google CEO Larry Page and fellow co-founder Sergey Brin retain control of the Internet’s most profitable company could cost Google more than half a billion dollars.

Page, 42, and Brin, 41, have maintained control over Google since they started the company in a rented Silicon Valley garage in 1998. Their ideas and leadership have spawned one of the world’s best known and most powerful companies with a market value of $368 billion and a payroll of about 54,000 employees.

Yet many investors have become frustrated with Page’s unwavering belief that Google should be spending billions on far-flung projects ranging from driverless cars to diabetes-controlling contact lenses that may take years to pay off and have little to do with the company’s main business of search and digital advertising. The big spending is one reason Google’s stock price is 3 percent below where it stood at the end of 2013, while the Standard & Poor’s 500 index has climbed 12 percent.

To maintain the power to drive Google’s direction, Page and Brin initially accumulated virtually all of the company’s class “B” shares, which have 10 votes for each “A” share. The duo, though, worried that control would erode as Google issued more “A” shares to pay for acquisitions and reward other workers. A year ago Thursday, Google split its stock to create a new category of “C” stock with no voting power that would allow more Google shares to be issued without undercutting Page and Brin.

Class “A” shareholders were outraged, skewering the maneuver as a textbook example of shoddy corporate governance. Google argued there wouldn’t be much difference between the price of “C” and “A” shares because Page and Brin held majority control anyway with the “B” shares. To settle a class-action lawsuit challenging the split, Google agreed to compensate “C” shareholders if the average price of “C” stock fell more than 1 percent below “A” shares through the first year of trading.

Google’s theory proved wrong, said BGC Financial Partners Colin Gillis. The difference turned out to be between 1 percent and 2 percent through the first year, though the final gap won’t be announced for up to 30 days as Google works with outside experts to determine the figures under a complex formula.

“This shows the market does place a value on owning a voting stock,” he said.

Google disclosed in a recent regulatory filing that it would have owed about $593 million to class C stockholders had the calculations been done on Dec. 31. Based on that estimate, the class C stockholders would receive roughly $1.74 per share in cash or additional stock. The exact amount that Google owes will be calculated based on the average trading prices over the full one-year period that ended Thursday after the stock market closed.

The Mountain View, California, company has until early July to pay the money. It’s something that Google can easily afford, given the company holds $64 billion in cash. And the damage could have been a lot worse: Google would have had to pay $7.5 billion, or about $22 per share, had the first-year spread between “A” and “C” shares was 5 percent or more.

Class C shareholders should ask themselves if the money they are getting is enough to compensate for relinquishing their voting rights and ceding control to Page and Brin, said Charles Elson, director of the University of Delaware’s Weinberg center for corporate governance.

Shareholders “are getting this cash for giving up their say in effective management,” Elson said. “This could be a case of ‘penny wise, pound foolish.'”

Google declined to comment.

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Oakland Post: Week of December 18 – 24, 2024

The printed Weekly Edition of the Oakland Post: Week of December 18 – 24, 2024

Published

2 days ago

December 20, 2024

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BWOPA Honors Black Leadership and Legacy at 2024 Ella Hill Hutch Awards Dinner

On Dec. 5, BWOPA held its Annual Ella Hill Hutch Awards Ceremony, at the Fairmont Claremont Hotel in the Oakland/Berkeley Hills. At the event, the group comprised of Black women from various professional backgrounds, honored distinguished local and state leaders whose contributions have shaped civic engagement and advanced critical social issues impacting Black communities.

Published

4 days ago

December 18, 2024

Oakland Post

L-R: BWOPA State Executive Director LaNiece Jones; State Asm. Mia Bonta; BWOPA 2024 Man of The Year/Urban League SFBA CEO Ken Maxey; BWOPA State President Hon. Dezie Woods-Jones; State Senator Lola Smallwood-Cuevas; Rowena Brown, Oakland Councilmember At-Large, Elect; BWOPA State Regional Director Vashone Huff. Courtesy photo.

By Oakland Post Staff

Black Women Organized for Political Action (BWOPA) is a statewide non-profit advocacy and membership organization committed to solving problems affecting Black Californians.

On Dec. 5, BWOPA held its Annual Ella Hill Hutch Awards Ceremony, at the Fairmont Claremont Hotel in the Oakland/Berkeley Hills.

At the event, the group comprised of Black women from various professional backgrounds, honored distinguished local and state leaders whose contributions have shaped civic engagement and advanced critical social issues impacting Black communities.

The evening was hosted by Dr. Shawna Charles, founder of The Charles Communications Group (CCG) headquartered in Los Angeles. Charles served as mistress of ceremonies.

With a track record of elevating voices and empowering communities, Charles’ leadership and insight brought a certain dynamism to the celebration.

“Each year, this event not only celebrates the enduring legacy of our beloved BWOPA founding member, Ella Hill Hutch, but also reaffirms and amplifies our unwavering commitment to building and sustaining Black political power across California,” said Dezie Woods-Jones, BWOPA founding member and State president.

“Ella Hill Hutch’s trailblazing leadership continues to inspire us as we forge ahead, empowering Black women to lead, advocate, and shape a more equitable future for all,” added Woods-Jones.

This year’s event introduced the DWJ Rising Star Award, honoring young leaders like Solano County Board Supervisors-elect Cassandra James, Danielle Motley-Lewis, Naomi Waters and newly elected State Assemblymember elect Rhodesia Ransom (D-Stockton).

According to organizers, the awardees all exemplify “the next generation of changemakers.”

Other awardees included:

Lifetime Achievement Awardees: Congresswoman Barbara Lee (D-CA-12) and Alameda County Supervisor Keith Carson
Man of the Year: Kenneth Maxey, CEO of the Greater SF Bay Area Urban League
President’s Corporate Award: Yvette Radford, Kaiser Permanente
In the Spirit of Ella State and Chapter Awards: Dr. Carolyn Greene, Dr. Marcella K. Smith, Dr. Carolyn Drake, Tinisch Hollins, Jackie Jones, Gloria Burgess Johnson, Tamika L’Ecluse, Ellen Nash, Betty Reid Soskin, and Ay’Anna Moody.

BWOPA also celebrated local champions across its chapters, including leaders in voter education, healthcare, criminal justice reform, and community advocacy.

In a statement, BWOPA said, “Honoring Ella Hill Hutch’s legacy, BWOPA recognizes her pioneering efforts as the first Black woman elected to the San Francisco Board of Supervisors. Her tireless work amplifying underrepresented voices continues to inspire BWOPA’s mission to build Black political power across California.”

“We extend our heartfelt thanks to our members, partners and allies who believe in BWOPA’s vision to invest in building power for Black women’s leadership,” said LaNiece Jones, BWOPA State executive director. “Your support ensures that Black women have a voice at decision-making tables locally, regionally, statewide, and nationally, advancing diversity and equity in leadership spaces.”

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Council of Islamic Relations Applauds Alameda County Decision to Divest $32M from Caterpillar

The divestment from Caterpillar, a company criticized for its human rights abuses globally—including the destruction of Palestinian homes, infrastructure, and agriculture, as well as in the U.S. prison-industrial complex, border militarization, and immigration detention centers—is a significant step in ensuring that Alameda County’s financial resources do not perpetuate harm.

Published

1 week ago

December 14, 2024

Oakland Post

CAIR-SFBA Policy Coordinator Musa Tariq. Courtesy photo.

Special to The Post

The San Francisco Bay Area office of the Council on American-Islamic Relations (CAIR-SFBA), the nation’s largest Muslim civil rights and advocacy organization, this week welcomed the Alameda County Board of Supervisors’ decision to divest $32 million in public funds from Caterpillar and unanimously commit to adopting an ethical investment policy.

The Board’s decision follows months of advocacy by Bay Area Divest!, a coalition of community organizations calling for accountability in public investments.

In November, CAIR welcomed the reported freeze on the delivery of bulldozers to Israel as an “implicit admission” by the Biden Administration that the far-right Netanyahu government is using that equipment in the ethnic cleansing of Gaza.

CAIR-SFBA Policy Coordinator Musa Tariq said:

“This is a historic moment for Alameda County, demonstrating the power of community advocacy and the County’s leadership in ethical governance. The decision to divest from Caterpillar sends a clear message that public funds should not support corporations complicit in human rights violations.”

In addition to divesting from Caterpillar, the Board voted to move forward with developing a comprehensive Ethical Investment Policy, recommended by District 5 Supervisor Keith Carson.

This policy will include criteria to exclude “investments in industries, corporations, or governments that perpetuate harm to communities and the planet,” such as fossil fuel extraction, weapons production, and entities involved in war crimes, apartheid, and other severe human rights violations.

Alameda County has a proud legacy of socially responsible investment. In 1985, the County divested from South Africa to protest apartheid, and in 1996, it barred investments in companies doing business with Burma due to human rights abuses.

“This forward-thinking policy positions Alameda County as a leader in socially responsible investing,” added Tariq. “By committing to craft the policy within 90 days and implement it within six months, the County has set an ambitious and commendable timeline.”

CAIR-SFBA is an office of CAIR, America’s largest Muslim civil liberties and advocacy organization. Its mission is to enhance the understanding of Islam, protect civil rights, promote justice, and empower American Muslims.