SAN FRANCISCO -- As Twitter made public its stealth filing for an initial public offering, it parted with some of its Silicon Valley brethren by saying it would only issue one class of shares, meaning it plans to give all shareholders a vote.
Unlike Facebook, Groupon and LinkedIn, Twitter will not have two classes of stock. (Or three classes of stock, like Google and Zynga).
Shareholder activists and corporate governance experts have heaped scorn on the practice that they say disenfranchises investors.
The practice is actually a holdover from companies in which families wanted to maintain control. But Silicon Valley has innovated on the art of offering shareholders ownership without control.
Take Google: It had two classes of shares, regular A-class shares and special B-class shares, which carry 10 votes each.
But Google wanted the ability to create new shares of stock without diluting founders' Larry Page and Sergey Brin's control over the technology giant. The new class of shares would not carry any voting rights at all.
Brockton Retirement Board sued Google in a bid to block the plan to issue the new type of stock that would make it tougher to challenge. In June, Google settled the shareholder class action lawsuit, clearing the way for the company to issue the new class of nonvoting stock.
That's not to say that Twitter is not taking steps to shield itself from activist investors.
"Our amended and restated certificate of incorporation and our amended and restated bylaws will include a number of provisions that could deter hostile takeovers or delay or prevent changes in control of our board of directors or management team,” the company wrote in its IPO filing made public on Thursday.
Among other things, Twitter said it is planning to have three classes of directors who are elected in different years. Twitter said its bylaws also limit shareholders' ability to call special meetings or call the shots in investor meetings. And Twitter said it has the right to issue preferred shares that would give those shareholders more voting rights than ordinary shareholders.
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