Expensify’s share structure
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https://seekingalpha.com/news/3762009-expensify-sets-ipo-terms
Expensify, a fin tech company that has built its business around business expense reporting, has gone public today — with GAAP profitability, no less. I talk about it here because I noticed that it’s gone public with three share classes: “Class A” shares are for the public investors, “LT 10” and “LT 50” shares are for insiders, where “LT 10” has 10x the voting power and “LT 50” has 50x the voting power of “Class A.”
The company is very transparent about its motivation for having the “LT 10” and “LT 50” shares, that it wants to let its insiders (basically the founder and his two buddies) hold onto the vast majority of the voting powers. The founder has stated explicitly that he does not want to submit the company to public shareholders’ short-term/short-sighted expectations, hence this mechanism to concentrate voting powers in the hands of insiders.
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This is not uncommon but I wish it were. FB has a similar structure. NYT even does.
Then they wave their hand and say they share “economic rights” equally just not voting rights, which is sort of hocus pocus. “Fiat shares” with no army to back them.
I wish shareholders would reject them outright. There was talk of excluding such share structures from major indices, I forget how that came out.
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Who do you dislike it?
There are many investors who don't want to be involved in the decisions. They just want to make a profit. Take Average Joe who buys some blue chip stocks for a few thousand $. Wouldn't it be a good deal for everyone if he or she gets a larger portion of the profits in exchange for no voting rights?
