Canadian ecommerce group Shopify has proposed a 10-for-one share split and put forward a plan to protect founder and chief executive Tobi Lutke’s voting power.
The plan, which has been recommended by the Canadian group’s board, needs to be approved by a two-thirds voting majority of shareholders.
Shopify at present has class A shares with one vote apiece and Class B shares with 10 votes each. This gives Class B shareholders a controlling stake with about 51 per cent of voting power, the group said in its statement on Monday.
Shopify is the latest tech company to announce a share split, following Amazon, Alphabet and Tesla. Stock splits are largely cosmetic, multiplying the overall share count and reducing the value of each individual share. However, the move helps to boost the attractiveness of companies for retail investors.
“The shift to digital commerce has been supercharged over the past two years,” said Robert Ashe, lead independent director. The board has undertaken a “careful review of Shopify’s governance structure to ensure the company is best positioned to capitalise on the massive opportunities for continued growth and value creation”, he added.
Shopify will under its latest proposal to update its governance structure authorise and issue a non-transferable founder share to Lutke, which will give him a variable number of votes.
This, combined with the shares he and his immediate family and affiliates own, will set and preserve his voting power at 40 per cent of the total for the group’s outstanding shares. Lutke will retain this founder share as long as he remains at the company as an executive, board member or a consultant.
“Tobi is key to supporting and executing Shopify’s strategic vision and this proposal ensures his interests are aligned with long-term shareholder value creation,” Ashe added.
Shopify’s services allow brands and independent stores to sell directly to customers through their own websites or social platforms such as Instagram as an alternative to trading through Amazon or other marketplaces.
Shopify shares rose about 1.5 per cent in pre-market trading to $612.