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Markets

One Share, No Vote

A takeover bid to buy Dow Jones spotlights family control.


When the Bancroft family turned the cold shoulder on a bid to buy Dow Jones & Co., it raised questions -- again -- about a multiple-share-class structure that gives stakeholders different voting rights. In the case of Dow Jones, Class B shares have ten times the voting rights of Class A shares, giving the Bancrofts 64.2% of the voting power with just a 24.7% stake.

Only about 9% of public companies have dual-class shares, but some well-known names are among them, including Washington Post, New York Times, Ford Motor, Berkshire Hathaway, Google, Comcast and Nike. There are many ways to structure share classes. Class A Washington Post shares (100% owned by the Graham family) can elect seven of ten directors. Comcast's Class B shares concentrate 33% of the voting control with the Roberts family, while Class A shares control the rest (Class A Special shares can't vote on corporate matters at all). Sometimes voting stock trades publicly; often, it doesn't.

Proponents of dual classes say managers with a long-term vision shouldn't be subject to the whims of fickle shareholders. But there's no denying that nonvoting owners can get short shrift. That's why Corporate Library founder Nell Minow advises approaching such shares with skepticism. "If you still feel strongly about the stock, go ahead. But keep in mind: If Google's founders decide tomorrow to convert the company into a bird sanctuary, shareholders are out of luck."