Google’s 2004 IPO created the model for founder control of public technology companies. It sold class A shares with one vote, while Page, Brin and Schmidt kept class B stock with 10 votes per share. Since then, companies including Facebook Inc. and Snap Inc. have used a similar concoction of super-voting stock to raise billions of dollars from investors while keeping decision-making in the hands of the original leaders. Another crop of tech IPOs is coming this year and the approach is being used again.
Tech companies argue these structures help them focus on long-term strategy, rather than obsessing over quarterly results to please Wall Street. But the approach can also leave founders less accountable if things go wrong. Last year, Google came under fire for giving executive Andy Rubin a $90 million exit package after an internal investigation determined he had an inappropriate relationship with a subordinate. Page allegedly granted a big stock award to Rubin. Directors signed off later, according to a recent lawsuit, but they had little say because Page, Brin and Schmidt still had voting control thanks to the class C stock.
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