The talk of Wall Street this month is Snap Inc., the parent company of Snapchat, a photo and video-sharing app beloved by teens and millennials. Its $3.9-billion initial public offering that went public on March 2.
While self-destructing messages are a selling point of the app, critics are lambasting the fact that long-standing corporate governance norms and traditional investor rights have also disappeared. Only non-voting shares in the company were offered to investors.
The concept of exclusively issuing non-voting shares is not unheard of. In the 1920s, the practice may not have been common, but neither was it particularly controversial. Since the 1940s, however, as exchanges improved post-Depression listing standards, no-vote stock became all but extinct. Until this month, that is, when Snap resurrected the practice.
Public shareholders of Class A common stock will have no say in the running of Snap. Co-founders Evan Spiegel, chief executive, and Bobby... To get the full story, subscribe now.