Investor advisory firm Glass Lewis & Co. says Shopify Inc.’s plan to augment founder Tobi Lütke’s power in the e-commerce company only passed because of the support from an early company investor and director.
The firm, which urged shareholders to reject the proposal, says its calculations indicate a strong majority of shareholders opposed the granting of the “founder share” to Lütke that guarantees he controls at least 40 per cent of the voting rights.
Shopify said that 54 per cent of shareholders approved the plan at its June 7 annual meeting. Support from a majority of class A and class B shareholders, excluding Lütke and associates, was one of the required calculations.
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However, Glass Lewis claims the proposal only passed because of support from longtime director John Phillips, whose Klister Credit Corp. is the only shareholder other than Lütke to control a significant number of Shopify class B shares.
The B shares carry 10 votes each, allowing Phillips to help push the plan over the line.
Glass Lewis also wrote in a blog that the proposal would have been defeated 65 per cent to 35 per cent had Klister’s shares counted as having only one vote, instead of 10.
“The vast majority of minority shareholders who opposed the new multi-class arrangement, only to see it edged over the line by the existing multi-class structure, may feel aggrieved by the outcome,” the advisory firm said.
It also questioned why Phillips was allowed to cast his multi-voting shares as “a disinterested” shareholder.