Shopify Inc, a Canadian e-commerce behemoth, announced a 10-for-1 stock split on Monday, joining a growing list of companies that have divided their shares to make them more appealing to investors.
Tobi Lutke, Shopify’s chief executive officer, and founder will also seek shareholder approval to authorize and issue a new class of shares known as the Founder share.
The plan aims to protect Lutke’s voting power by giving him a variable number of votes on the Founder’s share, which, when combined with his previously acquired shares from other classes, would give him 40% of the total voting power linked to all of Shopify’s outstanding shares.
However, according to the proposal, Lutke will only hold the Founder’s shares until he becomes a Shopify executive or a board member.
Despite the fact that D.A. Davidson & Co analyst Tom Forte feels founder shares are not in the best interests of shareholders, he said he is prepared to give Lutke the benefit of the doubt because of his “superb” track record.
“Given the recent dip in the (Shopify) stock,” Forte continued, “We feel it may insulate the firm from unwelcome suitors, such as Salesforce and Oracle.”
In morning trade, Shopify’s shares on the New York Stock Exchange were slightly lower at $602.61, but on the Toronto Stock Exchange, they were slightly up at C$765. This year, they have lost more than half of their worth.
The company’s class A shares currently have one vote per share, whereas class B shares have ten votes per share.
This year, e-commerce behemoth Amazon.com Inc (AMZN.O), Google parent Alphabet Inc (GOOGL.O), and videogame retailer GameStop Corp all announced stock splits (GME.N). Tesla Inc (TSLA.O) had also stated that a stock split would be sought from shareholders.