Google has completed its big stock split, but before you run out and buy Google stock, there are some details investors should know. Google trades under two stock tickers now: GOOGL and GOOG. GOOGL stock is voting shares, which are largely held by the current executives. This allows them to retain solid control of Google. GOOG stock is non-voting shares, which means investors in GOOG will have little or no control over the direction of the company, regardless of the number of GOOG shares owned.
On the one hand, it seems like having voting shares and non-voting shares is evil, as it pools power into the hands of a few elites. On the other hand, it's very likely that huge numbers of investors would never exercise their voting rights anyway.
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(Score: 3, Interesting) by aristarchus on Sunday April 06 2014, @12:22AM
A large number of Americans do not vote, either, but that is no argument that we should have two tiers of citizenship. Of course, this is not the way it has always been. So, how much should be expect that Google is leading us into a new feudalism? I would express my opinion, but evidently I currently hold only non-voting SoylentNews shares.
(Score: 2, Insightful) by sgleysti on Sunday April 06 2014, @02:04AM
When I was a kid, I really liked to hear stories before I went to bed. Accordingly, my mom would give me a choice: "would you hear two stories or three stories?" Of course, I always picked three, even though I would have wanted more. The illusion of choice was important, and it's good parenting.
It's also how I feel about voting.
(Score: 2) by VLM on Sunday April 06 2014, @12:06PM
There's a more practical problem with voting stock shares.
The vast majority of shares are either held by middlemen (mutual funds and friends) and the execs/employees.
So if you use majority voting, you'll never get anything other than a mandatory "yes man" stamp.
You'd be insane as a fund manager to buy shares with the intent of stamping "no" on the board of directors recommendation because how do you explain to your investors why:
1) you bought the "wrong" company and are now trying to change it via voting
2) you're wasting your time not being a yes man because the BoD recommendations are accepted about 99% of the time, so not only did you do the wrong thing in #1 above but you're doing it incompetently. Its not so much wasting your time, as publicly wasting your time and everyone knowing you're wasting your time but you.
3) much like the 2-party political system, the BoD is skilled at not providing any real choice other than window dressing. Oh, you'll get to vote, but never on anything important, and never when the outcome wasn't already pre-destined before the vote.
4) the way you're supposed to vote is by selecting a different company in the market, and suggesting you may need to do otherwise because of monopoly like situations is the right wing version of being HIGHLY politically incorrect. How dare you insinuate there's no free market solution? So its pretty much a farting in church situation, if you suggest there might be a need to vote against the BoD recommendations, was this guy raised by wolves, he must be a filthy hippie who shouldn't be an exec or in charge of a mutual fund or whatever.
So that's the long form of "illusion of choice" as applies to stock ownership.
There is a small competitive advantage in not wasting money on window dressing voting, it costs some money to implement and never does anything and never provides a return, so given two identical companies one with (meaningless) voting and one without, the one without will always be more successful by all measures.
(Score: 1) by Teckla on Sunday April 06 2014, @02:53PM
Good points, but:
What about the scenario where you bought the "right" company, but later, you don't agree with a proposed leadership change (say, the new CEO choice)?
I would guess your suggestion is "sell your shares in that company", but it would also be nice to be able to make your voice heard, through voting, and say, "No, I don't like that choice."
(Score: 2) by VLM on Sunday April 06 2014, @03:22PM
The vote won't matter, because most votes are rubber stamped to support the BoD.
So sell on the news.
What other possible input can you have?
At the top the individual leader doesn't matter very much. Lots of groupthink, schoolmates, that kind of thing. If you didn't like the old CEO its hard to dislike the new CEO for any business reason.
If its a cultural hatred thing like the former CEO of mozilla that is a different type of reasoning because someone doing something dumb enough in their private life to impact the view of the company will have measurable economic damage to the company... so offload the damaged goods, sell that turkey.
(Score: 2) by Aighearach on Sunday April 06 2014, @09:11PM
That actually translates to "you bought the wrong company because you had false ideas about their long term _______"
Generally you're supposed to invest in companies you believe in for the long term. So if they "change" direction in a way you don't like, that means you were wrong in choosing that company for the long term, regardless how you still feel about their historical policies or numbers.
Generally the "correct" response is seen as selling the stock to cut your losses, and buying into a company you believe in.
(Score: 1) by tirefire on Monday April 07 2014, @08:42AM
That's funny, I remember a few weeks ago I read an article about parenting where the author mentioned that psychiatrists used to think that being offered nothing but meaningless choices caused schizophrenia.
(Score: 1) by sgleysti on Monday April 07 2014, @02:46PM
psychiatrists used to think
sometimes a theory is just a theory ;)
(Score: 0) by Anonymous Coward on Sunday April 06 2014, @03:11AM
Ownership in Google is purely voluntary. And at that they're giving you a choice about whether to spend additional money to buy voting rights.
Choice is always the correct answer.
(Score: 1) by Anonymous Coward on Sunday April 06 2014, @05:57AM
Wrong! You won't find correct answers amongst a sea of incorrect choices.
More choices is not always good. I can give you two or three bad choices, or give you no choice and pick a good choice for you. The latter scenario is often better than the former. It's why we let chefs, surgeons, pilots, designers, etc make many choices for us. See also: https://www.youtube.com/watch?v=VO6XEQIsCoM [youtube.com]
That's why good defaults[1] are so good- millions of people won't waste time, energy and resources deciding on things they shouldn't have to be deciding on. Giving you more superfluous and stupid choices to make drains your mental energy for no benefit: http://www.nytimes.com/2011/08/21/magazine/do-you- suffer-from-decision-fatigue.html?pagewanted=all [nytimes.com]
Might even make some people fatter:
As for Google's action, it creates two tiers. Worse these tiers will inevitably be linked to $$$.
[1] Which is why many Desktop Linux approaches are stupid- "it's not bad or even better because you can configure it or change the code!". Picking good defaults should be the priority not making everything configurable and leaving it up to the users. The better your defaults are the more people stick to using them - having 95% stick to the defaults makes support much easier AND a more efficient use of your users time. The more users you have the more wasted user-years crap defaults will cause.
(Score: 2) by Aighearach on Sunday April 06 2014, @09:19PM
You sure will! Why? Because the choice is voluntary.
For example, you're walking through the forest. There are different types of berries growing. You're hungry. Which berries do you eat? They might all be poisonous, or if you're an average city person, they might all be unknown. So how can you find the correct choice, even if all the choices are dangerous? Because you don't have to stuff berries in your mouth, you can just keep walking, not pick any, and try to find a trusted food source.
In the same way. You're not obligated to invest in google. If you don't like either choice, that makes the choice you do like obvious; not to buy it. Duh. Your examples seem to leave out the fact that you don't have to make a choice here.
And by the way, nearly all companies have different classes of stock, where the most common stock has little or no voting rights. That is absolutely the standard thing. Even where the most common stock has voting rights, the stock the executives have usually has 25 times as many votes per share. There is no reason to try to understand it from basic principles, when it is something you should already know as soon as you hear that a company is organized as some sort of "corporation."
(Score: 1) by mvar on Sunday April 06 2014, @07:02AM
Until every company starts doing that
(Score: 3, Funny) by aristarchus on Sunday April 06 2014, @10:13AM
Have we learned nothing from the _Matrix_ movies? (OK, I immediately withdraw the question, once I have the chance to read it out loud.) Choice, the PROBLEM is choice. Random remnants of rational calculations (Oh, no, it's chaos theory) and we have no idea what is going to happen. (Skynet: They called it "Google" because "Skynet" was already taken.)
(Score: 1) by guises on Sunday April 06 2014, @03:52PM
This is only evil if you reflexively believe that democracy is the right approach to every problem that involves multiple people. It's been pretty effectively demonstrated with the ever increasing emphasis on quarterly results that this is not the case, or at least not always the case, for profit-seeking companies.
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(Score: 4, Informative) by Nerdfest on Sunday April 06 2014, @12:39AM
Don't most public companies have voting and non-voting shares?
(Score: 2) by randmcnatt on Sunday April 06 2014, @01:10AM
Most big companies have Common, or voting shares, and Preferred stock. Preferred shareholders usually get special treatment, like being first in line if the company liquidates and fixed guaranteed dividends, in lieu of voting rights. Then there can be all manner of sub-groups and rights and privileges. In this case, if I read it right (this stuff gives me a headache sometimes), Google has created a new class without voting rights that can be given to employees and used in stock-trades, but current stockholders won't (aren't supposed to) lose any money on the deal.
The Wright brothers were not the first to fly: they were the first to land.
(Score: 2) by Nerdfest on Sunday April 06 2014, @01:12AM
Thanks. I thought non-voting (Class C?) shares were a fairly common thing.
(Score: 2) by randmcnatt on Sunday April 06 2014, @01:58AM
This time (I think), Google had A shares which had one vote each, and closely-held (untraded) shares which had 10 votes each. They wanted to create a new Class that would not have any voting rights and split it among the Class As.
But IANAL or a stockbroker so that might be completely wrong. http://www.investopedia.com/ [investopedia.com] has more information than most humans ever want on the subject.
The Wright brothers were not the first to fly: they were the first to land.
(Score: 0) by Anonymous Coward on Sunday April 06 2014, @05:34PM
No.
Common shares are equity. They are the normal shares. There is generally no split between "voting" and "non-voting" common shares. Any company that slits their shares to different classes treats their shareholders as chumps and should be avoided.
Preferred shares generally have *nothing to do with equity*. They tend to be debt, like bonds. Each issue is different from another. You really need to read prospectus to know WTF a given issue is.
(Score: 2) by ngarrang on Sunday April 06 2014, @01:40AM
Investors can very short-sighted and stupid. The stock market has been responsible for more economic disasters than one can count. The stock market is at fault for a company like Twitter, which produces nothing, to have such an absurd value. Google is smart to not left the cattle have any voting rights.
(Score: 0) by crutchy on Sunday April 06 2014, @08:41AM
that's not true... it produces twits!
(Score: 3, Insightful) by VLM on Sunday April 06 2014, @11:53AM
"The stock market is at fault"
You meant to write the central bank ZIRP zero interest rate policy makes irrational net present value of capital purchases.
Joe 6 pack has a $1500/month mortgage budget so joe 6 pack's mortgage WILL be $1500 and the only way the price of his house is determined will be the central bank interest rate at $1500 = whatever sales price. My parents bought their first house at 18% interest in the late Carter / early Reagan years, no surprise they sold it for a huge multiple some years back at lower interest rates. J6Ps gonna pay the same monthly. Till he gets downsized and perma kicked out of the labor force anyway, which in recent years has been another issue. Anyway...
To some extent stock prices are the same way. Not simple and direct, but indirect. So you can't put money in the bank or buy bank CDs because the rate of return is far below the actual inflation rate, so you must buy stock, so the market is flooded with speculators who know and understand nothing other than it only goes up because it only goes up, no other reason. That capital has to go "somewhere" and it can't go in banks because of central bank policy, and we're in permanent economic decline so investing in production facilities would be idiotic, so... given a plate of garbage alternatives, the least awful is unfortunately groupon stock or whatever. I mean, you can't seriously suggest they put money into a domestic onshore factory, can you, LOL? Or they give it to a bank which doesn't need it because of bailouts and doesn't want it because they pay less than you'll lose in inflation?
(Score: 5, Interesting) by frojack on Sunday April 06 2014, @12:42AM
If you had shares, those shares will still retain voting rights.
After the split, you will get additional shares.
Your new shares will not get voting rights.
Nobody who had voting rights will be deprived.
But new arrivals are strictly in it for the financial wager aspects.
You should still be able to buy the GOOGL voting shares in the future, but its pretty pointless because whatever puny amount you can throw at the market will never over come the ownership of insiders and major investors.
Still it will be interesting to see the divergence in price over the coming years. Just how much is a Vote worth?
No, you are mistaken. I've always had this sig.
(Score: 3, Insightful) by frojack on Sunday April 06 2014, @12:44AM
Oh, and also there is this bit:
Both Brin and Page hold non-trading Class B shares in Google, and they too will receive a Class C share to go along with each Class B share they hold.
So there are really three classes of stock. The company is set up to make a take-over or stockholder's revolt almost impossible.
No, you are mistaken. I've always had this sig.
(Score: 3, Interesting) by Nerdfest on Sunday April 06 2014, @12:56AM
I think that's a good thing. To date, they at least some attention to "Don't be Evil" ... certainly more than most companies. The *potential* for evil at Google is enormous and a takeover by the usual suspects would be very bad.
(Score: 0) by Anonymous Coward on Sunday April 06 2014, @01:39AM
They only told you half the slogan. It's: "Don't be evil. Be far worse than that."
(Score: 2) by tibman on Sunday April 06 2014, @01:50AM
Then they aren't doing a very good job : /
SN won't survive on lurkers alone. Write comments.
(Score: 1) by gishzida on Sunday April 06 2014, @03:40AM
Last I heard the NSA and the GCHQ were run by "governments".... thoug I imagine there are a number of companies that would wet themselves at the thought of having that kind of access to user "big data".
In other news Apple announces "bayonet mounts" [appleinsider.com] for iPhone6... one wonders when they plan on starting to the sale of the bayonets... or a rifle with a drop in iPhone / ipod / iPad interface...
(Score: 1) by quacking duck on Sunday April 06 2014, @04:39PM
I'm not sure whether you're trying to make a joke, or missing one, since the articles and the patent approval itself was on April Fool's day.
(Score: 1) by gishzida on Sunday April 06 2014, @07:12PM
Making one... since the parent post was trying to point out how "evil" Google is... there is evil and then there is the government. Throwing in the Apple Bayonnette was just the funny colored cherry on the Evil cake the NSA and GCHQ has given us...
but obviously it must not have been too funny since I'm having to explain it. regards...
(Score: 1) by mvar on Sunday April 06 2014, @07:10AM
It'll be interesting to see how this plays out in the future. The "democratic" governance of companies through their stockholders rights and votes has always been capitalism-supporters' strongest argument against other types of economic systems e.g. socialism
(Score: 0) by Anonymous Coward on Sunday April 06 2014, @07:24AM
Non-voting stock isn't stock.
It is a corporate bond by another name.
(Score: 1) by khallow on Sunday April 06 2014, @08:07AM
No, it is stock since the holder is at the bottom of the heap should the company go into bankruptcy. If it were claimed to be a bond (unsecured debt is higher up on that hierarchy), then that would be fraud due to this key point.
(Score: 2) by bradley13 on Sunday April 06 2014, @07:50AM
This is quite normal in other markets. Even in the US, it isn't new - there are a other few companies that do this.
The point is this: both types of stock are on the market. You can bid on whichever kind you prefer. If voting rights are not of interest - if you just want to jump on the bandwagon without trying to steer it - you can. Typically, the non-voting stock sells for slightly less than the voting stock, and is preferred by small investors and short-term "investors".
This is not a bond. A bond is a different beast entirely, basically a simple loan at a fixed interest rate. Barring bankruptcy, you get paid what you expected regardless of company performance. Stock, even non-voting stock, is offering a company working capital in return for a proportional portion of the company's success. Stocks are riskier, but have a higher upside. Legally, shareholders also have different rights and obligations than bondholders.
Everyone is somebody else's weirdo.