Dual-Class Structures & Classified Boards
Evidence from 2018-2023
Dual-class stock structures and classified boards are perennial issues in corporate governance, drawing sustained attention from both market participants and academics. Commissioner Mark Uyeda of the Securities and Exchange Commission recently highlighted these issues as ones with a financial impact on valuations that has “been known for a long time.” Dual-class structures grant outsized voting rights, relative to other classes of stock with equal economic rights, usually to insiders such as founders. The concern for investors, as owners of the corporation, is that these insiders may have incentives that do not align with maximizing long-term shareholder value.