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Google (GOOG) announced first-quarter earnings yesterday, reporting $49 billion in cash and short-term marketable securities. This is a $6 billion increase from the prior quarter. Investors were expecting the commencement of a cash dividend, but instead were given a 2-for-1 stock split. Well, sort of.

Google is creating a new class of stock that will be called Class C shares. This class of stock has no voting rights. This seems like a three-card monte trick, as the company is giving you a new certificate with no votes. Seems as if you're getting something for nothing, but you're actually getting your voting power cut in half. What's even funnier is Google says it's going to use this new class of shares as a compensation award to its employees. Employees, we care about you so much we are going to give you company stock. But we don't care about you that much, as you will have no voting power and will not be a "real" owner of the company.

It's OK to issue a new class of shares, but I don't think it's OK to force existing shareholders to take on this new class. The company could have done a nominal secondary offering to raise capital via Class C shares and then use that class for future stock awards and acquisitions. Google could buy back the publicly traded voting shares over time, and by doing so increase the voting power of existing super-voting shares. Somebody needs to challenge the legality of this stock dividend.

Source: Is Google Pulling A Three-Card Monte Trick?