Google’s plan to split its stock, announced last month, has been legally challenged by a Massachusetts pension fund.
Under Google’s proposal, shareholders will receive one new share of non-voting Class C stock for each existing Class A share, meaning that Google will be able to issue new shares for acquisitions, without diluting the over half (56 per cent) voting stake currently held by Larry Page and Sergey Brin.
The Brockton Retirement Board argues that this is unfair, and doesn’t act in the best interests of shareholders – rather it’s in the interest of maintaining Page and Brin’s “iron-clad grip” on the company.
The complaint, filed in the Court of Chancery in Delaware, stated that the pair “wish to retain this power, while selling off large amounts of their stockholdings, and reaping billions of dollars in proceeds.”
Furthermore, the suit alleges that the committee of Google Directors which approved the proposal failed to cover all the bases they rightly should have, including obtaining an evaluation of fairness among other measures.
Therefore the pension fund wants the split blocked, and also damages coughed up to boot.
Google hasn’t as yet made any comment on the lawsuit, but we expect we’ll be hearing something soon enough.
Source: ReutersLeave a comment on this article