Shopify Asking Investors to Approve Changes to its Share Structure

Shopify is asking its investors to approve changes to its complex share structure to protect the voting power of the leader of the company. The company is currently proposing a 10 for 1 stock split. 

The shares of the company fell about 55% so far this year. The shares closed at $603.18 on the New York Stock Exchange, with a market valuation of $76 billion. 

Under the proposal, the co-founder and CEO of the company, Tobi Lütke will receive a new founder share that will increase his voting power from 34% to 40%. He will still keep the founder share as long as he remains at the company as an executive, a board member and a consultant.

As a computer programmer who founded the company in 2006, Lütke cannot transfer the founder's shares to his family and loses the right to transfer Class B shares to his family. If he sells  Class B shares, they will automatically be converted to Class A shares and will lose their supervisory status. Shopify’s Class B shares carry 10 times the voting power of each Class A share. 

The company was one of the biggest winners during the pandemic, as the e-commerce activity surged after the lockdown. But as the pandemic restrictions have eased, shoppers started returning to physical stores and the company outlined its plans to invest to build its own delivery network. 

Shopify is planning to ask its shareholders to approve the founder share structure and the 10 for 1 split at its annual meeting on June 7.