john gapper

Silicon Valley’s commitment to shareholder democracy – or to public shareholder democracy as opposed to the influence wielded by venture capital firms – does not seem to be strong.

The news that Facebook has established a dual-class share structure, converting its existing shareholders to Class B stock carrying 10 times the voting rights of Class A shares, suggests that (despite its denials) Facebook is readying itself for an initial public offering.

It is also falling in line with Google, which created a dual-class share structure for its IPO in 2004, which also gave 10 times the voting power to some shareholders. Eric Schmidt, the company’s chief executive, and Larry Page and Sergey Brin, its co-founders, control the majority voting rights as a result.