Shopify Plans 10-for-1 Split and Voting Control for the Founder CEO

Power to the Founder

Ecommerce company Shopify (SHOP) will seek shareholder approval for a “founder share” and a 10-for-1 stock split at its June 7 meeting. Founder shares refer to equity given to founders of the company. The move follows similar stock-split announcements this year by Tesla (TSLA), Alphabet (GOOGL), and Amazon (AMZN).

The plan aims to enhance the voting power of Shopify’s founder and CEO Tobi Lütke, who wants to safeguard his control of the company. The Canadian company, founded in 2006, offers a platform that facilitates online business sales.

Share Shuffle

The proposed non-transferable “founder shares” are meant to complement the existing share structure, which includes Class A and Class B shares. In support of Mr. Lütke, his mentor John Phillips plans to convert his “supervoting” Class B to Class A shares. Doing so will increase Mr. Lütke’s voting power.

If the founder shares are approved, Mr. Lütke would retain 40% voting control even if he sells his Class B shares, which have 10 times the voting power of each Class A share.

Shopify’s Wild Ride

Shopify stock has been on a wild ride in recent years. The company benefited from the pandemic-triggered lockdown. The stock’s price surged 300% from early 2020 to late 2021,, but this trend reversed as COVID restrictions eased. Shares have lost over 50% of their value this year.

Some market observers have criticized the company’s corporate governance structure, especially the compensation offered to the CEO in the form of millions of dollars’ worth of stock options. Still, the firm has gotten shareholder support in the past. It remains to be seen if Mr. Lütke’s wishes continue to be granted given the stock’s recently disappointing valuation.

Things are changing daily within the financial world. Sign up for the SoFi Daily Newsletter to get the latest news updates in your inbox every weekday.
Sign up

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Adviser
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.
SOSS22041201