The approval received Tuesday at the
The founder share will sunset if Lütke no longer serves as an executive officer, board member or consultant whose primary job is with the company or if Lütke, his immediate family and his affiliates no longer hold a number of class A and class B shares equal to at least 30 per cent of the class B shares they currently hold.
In the event of a sunset of the founder share, Lütke will also convert his remaining class B shares into class A shares.
At least one proxy advisory firm, which compiles reports for shareholders ahead of such votes, opposed Shopify's proposal.
"We have never been in favour of protective voting powers like that given to Tobi, as it doesn't instill best practices from a governance perspective," said
He warned that Lütke's age, 41, means the founder share could remain intact for decades and deter new investors, activists, mergers and acquisitions, but noted that dual class shares are not uncommon in tech and he feels Lütke has done a "magnificent" job.
"(The move) certainly consolidates a lot of power in the founder and you could say, to the prejudice of the minority shareholders,"
He sees the proposal as a way of giving Lütke his due for founding a "spectacularly successful" company that dates back to 2004, when he received an investment from his father-in-law
However, Powers pointed out there have been instances where giving a founder or his or her family so much power have caused trouble.
Last year, for example,
"These things can blow up and there's very little investors can do when you have the founder-controller," Powers said.
Shopify shareholders also approved Tuesday a 10-for-one split of the company's class A and class B shares, which Shopify has positioned as a way to make voting shares more affordable to a broader segment of the population and diversify its ownership base.
To be approved, the share split had to garner the support of a two-thirds majority of shareholders and at least a majority of the votes cast by shareholders excluding Lütke and his associates and affiliates. Shopify did not immediately say what margin of approval it received for the two measures.
Under the new structure, Shopify director
As of
John and
The votes come after Shopify shares plunged from a 52-week high of
In response to the stock drop, company executives, including Lütke, president
Lütke posted that he alone placed a
"When everyone else has sought reward from safety, we have sought reward from serving others and from taking risks," he said in a note he posted to Twitter.
"And every year, we have gotten better and better at taking bigger risks and serving more people."
This report by
Companies in this story: (TSX:SHOP)
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