Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Do Dual-Class Stocks Make for Second Class Shareholders?


Twenty dual-class IPOs occurred in the US last year, up from only a dozen in 2010. In the S&P 500 (INDEXSP:.INX), forty companies employ this structure.

Assigning various share classes that carry different voting, and in some cases dividend, rights has a long lineage on Wall Street.

The International Silver Company began the practice when it issued 11 million non-voting equities in 1898. The Roaring Twenties' market mania cemented the practice, although the crash with which that decade came to a shuddering close led to an eventual ban by the NYSE (NYSE:NYX).

Dual-class shares have historically proven particularly popular with old-time media moguls, where a cadre of tightly knit family members often exerted an iron grip. Industry examples include the Ochs-Sulzberger trust of New York Times fame, the Washington Post (NYSE:WPO) Grahams, the Bancroft family behind Dow Jones, and Time Mirror's Chandler clan. The preservation of journalistic integrity and prevention of undue outside editorial interference are the principal reasons cited for the prevalence of dual stocks in the newspaper arena.

Adolph Coors, Ford Motor Company (NYSE:F), and Hyatt Hotels (NYSE:H) are instances of equities in other sectors that have operated along similar lines over the years.

After lying dormant for decades, dual stocks enjoyed another of their periodic moments in the sun during the 1980s, when they were employed as a useful tool to rebuff the cutthroat corporate raiders of that era. Ironically on July 4, 1986 - the very day millions gathered in New York Harbor to celebrate the centenary of that ultimate testament to democracy, the Statue of Liberty - that morning's newspaper headlines told of the NYSE's decision to do away with its time honored "one share, one vote" rule. Eventually individual exchanges again tightened their rules but, crucially in light of future developments, agreed to allow a company to go public if its dual class structure was already in effect at the time of the IPO.

No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Featured Videos