Larry Page Says Google's Stock Split Is An Investment For The Long Term, Not For Acquisitions

Apr. 12, 2012 6:37 PM ETAlphabet Inc. (GOOG)META8 Comments
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By Ingrid Lundgren

Larry Page kicked off Google’s (NASDAQ:GOOG) earnings call today with a run-down of his statements in the Founders’ Letter and some broad brushstrokes around the company’s new stock structure, which will see Google create a new class of shares, effectively a two-for-one stock split for existing shareholders.

As with the company’s original two-class voting structure, Page today reiterated that this new structure is a sign of the company’s long-term investment in its future, but not a signal that it is planning “any big acquisitions.” It is also something of a bold statement on the part of Google — possibly to show the company’s confidence in its business in the run-up to Facebook’s IPO, and to give its founders more control over how Google develops in the future.

Some points on the new structure, which is explained in more detail below, and will be further laid out next week in a proxy statement that Google will file with the SEC:

The new class, Class C, will have many of the same existing rights as Class A and B but no voting rights, Page said. “Everyone will retain the same voting interests.”

If Larry Page, Sergey Brin and Eric Schmidt sell shares in the Class C stock in the future, their voting rights will also diminish proportionately via a “stapling” provision.

What to make of this? One take we have seen: this could essentially give a lot more power to Google founders. Effectively the new class will not have voting rights while the Class A shares, held by Page, Brin and Schmidt will continue to hold voting rights. Currently, the three control 66 percent of voting power over the company’s shares.

This is an aggressive move but considering that Mark Zuckerberg will essentially be in control of Facebook (FB) (per his

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