Google’s Brin And Page To Sell Off Shares; Give Up Majority Voting Power Over Five Years

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Google’s Brin And Page To Sell Off Shares; Give Up Majority Voting Power Over Five Years

Google (NSDQ: GOOG) just put out an SEC filing indicating that co-founders Larry Page and Sergey Brin will soon begin to sell off some of their holdings in the company, as part of a predetermined trading plan. The men intend to sell about 10 million shares in the company over the next five years, representing about 17 percent of their holdings. According to the filing, that would mean that they would control about 48 percent of Google’s voting power, down from 59 percent, effectively giving up majority control of the company, although they, of course, would continue to wield significant executive power given the amount of stock it would take to overrule them.

The filing states that Brin and Page are selling off the shares—which at today’s prices are valued at about $5.5 billion—as part of their “respective long-term strategies for individual asset diversification and liquidity.” (We’ve asked Google to elaborate).

The approach is common among founders of publicly-traded companies, including Microsoft (NSDQ: MSFT) co-founder Bill Gates, who sells a pre-specified amount of his Microsoft holdings each quarter in order to diversify his portfolio.

Joseph Tartakoff

@josephtartakoff Jan 22, 2010 5:17 PM ET

Photo: Corbis

Posted In: Money, Companies, Google, larry page, sergey brin

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Emeri Gent [Em]

As the share ownership percentage goes down, I am asking myself how minority shareholder rights kick in and how that is leveraged?

48% of a lot is a lot, which is far different from 48% of a little. My focus right now is from the little guy point of view and figuring out how share ownership best works for those at the bottom end of the value creation food chain.

I’ve heard of think global, act local but I guess I must focus more on thinking big and acting small.

[Em]

Hamlet

Joseph wrote “Well 10 million shares at $550 makes the sale potentially worth about $5.5 billion.”

i strongly disagree: $550 is the price for class A shares. They are selling class B shares, which are more expensive because (i think) they are not publicy traded.

Robert Andrews

Are we thinking it’s going to carry on going up? I mean, will this stock ever dip - what will it take? Is it a long boom?

You don’t have to answer. It’s not Ask Joseph Tartakoff Anything.

Joseph Tartakoff

Well 10 million shares at $550 makes the sale potentially worth about $5.5 billion. But that’s a false number since who knows what price Google will be trading at in five years.

Robert Andrews

How rich will they become?

Joseph Tartakoff

So they’re selling the special class—Class B—which has more voting power (10 times) than Class A shares. That’s why they’re only cutting their stake in the company down to 15 percent from 18 percent but nevertheless have their voting power cut from 59 percent to 48 percent. So I do think they could theoretically be overruled now.

Yes, two classes of stock:
http://www.businessweek.com/magazine/content/04_32/b3895134_mz026.htm

Class A gets 1 vote; Class B that they have gets 10 votes per share. But yeah, the part in the filing that says ” 48% of the voting power of Google’s outstanding capital stock” suggests that that greater number of votes per share is being taken into account.