Alphabet Inc. (NASDAQ:GOOG) newly unsealed court docs reveal Larry Page threatened to leave if the company didn’t find a way to keep him in control
Google’s board of directors created a third class of stock in 2012 in part to placate cofounder Larry Page, who was worried about losing control of the company, Bloomberg reported Wednesday, citing recently unsealed court records.
Page fretted that fellow cofounder Sergey Brin and top executive Eric Schmidt, who along with himself held shares that collectively gave the threesome control over the company, would sell their super-powered stock, Bloomberg reported. Starting in late 2010, Google’s founders and board started negotiating over a plan to create a third class of stock that would help ensure that he would retain control over Google even if they did so.
In June 2011, with negotiations still ongoing, Page suggested he might resign if the company’s board didn’t resolve the dispute to his liking, according to the court records cited by Bloomberg.
Page “leveled a veiled threat in that ‘why should I sacrifice and work so hard if I might not be in control,’” Paul Otellini, a Google director at the time, said in a 2011 email.
At the time, Google, now a part of holding company Alphabet, had two classes of shares. Class A, held by everyday investors, had one vote per share. Class B, held by Page, Brin, and Schmidt had 10 votes per share. Those super-powered shares gave the threesome 66% of the shareholder votes at Google.
But under the terms of Google’s corporate structure, if any of the three top officials sold their Class B shares, their stock would be converted into Class A shares, and the threesome would lose a portion of their control. Their control could also be diluted if Google issued new Class A shares as part of an acquisition.
Google, now a part of holding company Alphabet, ultimately created a third class of stock – Class C shares – that it distributed as a dividend to existing shareholders. Those shares come with no votes, meaning that Google can issue an endless number of them without affecting the voting control held by Page, Brin, and Schmidt.
The revelation about Page’s threat to leave the company was found in documents filed in a shareholder lawsuit over the establishment of the Class C stock. The investor who sued complained that Google was giving its founders additional control over the company at the expense of regular shareholders without compensating investors for it. The investor was also worried that the new shares would allow the founders to sell off significant numbers of shares – and thus dramatically decrease their economic stake in Google – while still retaining control of the company.
As part of a 2013 settlement of that suit, Google agreed to require Page, Brin, and Schmidt to sell their Class B shares whenever they sold Class C stock. It also agreed that any attempt to change the requirement would have to be approved by Google’s entire board.
Google was one of the first tech companies to have a dual-class stock structure. But that set-up has since been copied by Facebook and Snap and has become increasingly popular among Silicon Valley startups looking to go public. Advocates have touted them as a way to allow corporate founders to focus on their organisation’s long-term success, rather than on the day-to-day concerns of short-term investors.
But such stock structures have drawn increasing scrutiny and criticism of late, because they can insulate corporate insiders from legitimate shareholder and societal concerns. Such worries have been highlighted at companies including Facebook, which has seen a string of scandals over the last two years, and Snap, which has struggled financially and operationally since becoming a public company.
Overall, the bias in prices is: Upwards.
Note: this chart shows extraordinary price action to the upside.
By the way, prices are vulnerable to a correction towards 1,118.75.
The projected upper bound is: 1,246.45.
The projected lower bound is: 1,146.44.
The projected closing price is: 1,196.44.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 26 white candles and 24 black candles for a net of 2 white candles.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 92.8385. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 4 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 70.76. This is where it usually tops. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 102 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 151.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 4 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 8 period(s) ago.
Rex Takasugi – TD Profile
ALPHABET INC C closed up 0.120 at 1,193.320. Volume was 15% below average (neutral) and Bollinger Bands were 13% wider than normal.
Open High Low Close Volume___
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 1,157.65 1,103.61 1,126.18
Volatility: 22 29 32
Volume: 1,452,873 1,482,583 1,634,278
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
ALPHABET INC C is currently 6.0% above its 200-period moving average and is in an upward trend. Volatility is low as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of GOOG.O at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on GOOG.O and have had this outlook for the last 7 periods. Our momentum oscillator is currently indicating that GOOG.O is currently in an overbought condition.