Letter to the WSJ Ken Bertsch, Executive Director of the Council of Institutional Investors:
Your editorial “Dueling over Lyft’s IPO” (March 23) misses what the Council of Institutional Investors (CII) believes Lyft should have done—“sunset” founder supervoting rights in a reasonable period.
While one-share, one-vote worked for Lyft as a private company, its board believes that as a public company founders should have 20 votes per share. Well, fine. But don’t pretend that IPO markets can adequately price in the risk of this structure 10, 20, 30 years down the road. The CII requested that Lyft include a time-based sunset on the dual-class structure of no more than seven years, renewable for multiple additional terms by shareholders voting on a one-share, one-vote basis. Academic evidence suggests that special voting rights that entrench managers can be damaging in the longer-term. And public company voting structures are difficult to change.
My guess is that Google (now Alphabet) shareholders would have approved an additional seven-year term in 2011—seven years after the IPO—but that Facebook shareholders this year (seven years after that company’s IPO) might hesitate, given questions on Mark Zuckerberg’s leadership. Let’s build in an accountability moment so that shareholders can affirm that continued protection for founders makes sense.
You know how people are always telling us that if we don't like a TV program, just change the channel. Why shouldn't the same apply to shareholder activists and their enablers? If they don't like a company's corporate governance, they should just go buy stock in some other company.
