The Corporate Practice of Gerrymandering the Voting Rights of Common Stockholders and the Case for Measured Reform

The voting rights of common stockholders have been gerrymandered through the use of dual‐class and multiclass governance structures, which drive a wedge between the economic interests and voting entitlements of shareholders. These corporate governance structures are designed to preserve control for corporate insiders, including founders and family members. Insiders can secure majority voting power in corporate affairs without needing to retain a proportionate economic interest in the enterprise. The corollary is that ordinary shareholders are not afforded a commensurate amount of voting rights with their economic interest. Main Street investors have a diminished voice, and their ability to influence the decisionmaking of firms is diluted. Although dual‐class structures date back nearly a century, this practice has been on the rise in American corporations—especially following Google’s debut as a public company.

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