The Brockton Retirement Board is suing Google co-founder Larry Page and other executives today for its recently proposed stock split.
Google announced it would be splitting its stock in its first quarter 2012 earnings call. Page explained on a conference call regarding the split that for every class A common share, Google would match it with another, non-voting share. This would make a class C of common stock and Page put the emphasis on non-voting. Preventing this new class of stock from having any voting rights means Google co-founders Page and Sergey Brin get to maintain control of the company, and not dilute their own voting power.
This is where the Brockton Retirement Board balked. The Massachusetts pension believes that Page and Brin are not acting in the best interest of its shareholders, and that this is just a way for the two co-founders to rake in billions of dollars, without doing much for it. Additionally, it believes Google did not have the stock split fairly reviewed before approval.
“[The co-founders] wish to retain this power, while selling off large amounts of their stockholdings, and reaping billions of dollars in proceeds,” Brockton Retirement Board explained in its complaint. “The reclassification effort is a thinly veiled attempt to entrench [the co-founders] as dominant shareholders of Google by creating a non-voting class of Google stock in order to preserve their voting power into perpetuity.”
The complaint was filed in a Wilmington, Delaware court today. The case is Brockton Retirement Board v Larry Page et al, No. 7469.
hat tip Reuters, Bloomberg; Photoshop by Jolie O’Dell