ANALYSIS: Will Investors Stick With Dual-Class Shares?

Lyft, Inc.’s much-ballyhooed IPO reignited the debate over the use of dual-class shares by public companies. Should a tiny minority of shareholders lock in control of a corporation’s votes indefinitely, simply because they are founders or family owners?

Dual-class stock commonly refers to any capital structure involving shares with unequal voting rights. The term can be a bit misleading, as it also includes companies that issue multiple share classes with differing rights. In the Lyft IPO, announced March 1, 2019, company insiders received shares with 20 votes each while shares issued to the public carried only one vote. This governance ...