Monday, 25 January 2010

Ownership and control of Google

In the last days i read this:

NYT: Google Founders to sell, but are not losing control

Paid Content: Google's Brin and Page to sell off shares; give up majority voting power over five years

Techcrunch: Google Co-Founders plan to sell up to 10 million shares over next five years

BBC: Google co-founders to sell shares

Everything started because there was a SEC filing (=communiqué from SEC) saying:

On November 30, 2009, Larry Page and Sergey Brin each adopted stock trading plans in accordance with guidelines specified under Rule 10b5-1 of the Securities and Exchange Act of 1934 and Google’s policies regarding stock transactions. In the future, they will begin selling a portion of their Google stock pursuant to these stock trading plans.

It means: onNovember 30, 2009 Larry Page and Sergey Brin told SEC that they are going to sell some shares of Google

Larry and Sergey currently hold approximately 57.7 million shares of Class B common stock, which represents approximately 18% of Google’s outstanding capital stock and approximately 59% of the voting power of Google’s outstanding capital stock. Under the terms of these Rule 10b5-1 trading plans, and as a part of a five year diversification plan, Larry and Sergey each intend to sell approximately 5 million shares. If Larry and Sergey complete all the planned sales under these Rule 10b5-1 trading plans, they would continue to collectively own approximately 47.7 million shares, which would represent approximately 15% of Google’s outstanding capital stock and approximately 48% of the voting power of Google’s outstanding capital stock (assuming no other sales and conversions of Google capital stock occur).

To understand that, we need to understand the corporate governance of Google. At January 31, 2009, there were 240,289,354 shares of the Class A common stock outstanding and 75,004,353 shares of the Class B common stock outstanding. Class B shares are special shares: each one has 10 voting rights; Class A common stock has been listed on The Nasdaq Global Select Market under the symbol “GOOG” since August 19, 2004 and ; Class B common stock is neither listed nor traded.

If we read that: (annual report 2008; page 30)

Our board of directors may issue, without stockholder approval, shares of undesignated preferred stock. The ability to issue undesignated preferred stock makes it possible for our board of directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to acquire us.

We can be sure that, with Brin and Page holding 48% of voting rights (Eric Schimdt another 10%), nobody can take away the control of Google

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