Shopify is trading higher on Monday after the e-commerce platform’s board announced plans to seek shareholder approval for a 10-to-1 stock split.
Under the proposal, Shopify shareholders of record at the close of business on June 22 would receive nine Class A or Class B shares for each share held.
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The planned move follows similar proposals from Alphabet, Amazon, GameStop and Tesla in recent weeks.
The tech giants plan to reward their investors with 20-for-1 stock splits, while the video game retailer said it plans to increase the total number of authorized shares from 300 million to 1 billion in order to implement a stock split in the form of a dividend. Meanwhile, the electric vehicle maker said it would clear additional shares to enable its second stock split in two years, but did not say when the stock split would take place or what the ratio would be. of shares.
In addition to the stock split, Shopify’s board has offered to offer its CEO Tobias Lütke a non-transferable “Founder’s Stock,” which would give him a total voting right of 40% when combined. with Class B shares held by his immediate family, his affiliates and himself. As part of the proposal, Lütke and its affiliates agree that they will not transfer their Class B shares without Lütke retaining voting control over those shares, preventing an intergenerational transfer of such voting rights.
The Founder’s Share will expire if Lütke is no longer an officer, board member or consultant to the company or if he, his immediate family and affiliates no longer hold a number of Class A and Class B equivalent to at least 30% of the Class B shares currently held. In the event of a lapse, Lütke would convert its remaining class B shares into class A shares.
“A special committee of independent directors has carefully and thoroughly reviewed this proposal and determined that, taken together, these changes will enhance Shopify’s strategic flexibility and ability to seek value-creating organic and external opportunities,” the principal said. independent director of Shopify, Robert Ashe, in a press release. statement. “Tobi is essential to supporting and executing Shopify’s strategic vision and this proposal ensures his interests are aligned with creating long-term shareholder value.”
Adoption of the proposals is subject to the approval of at least two-thirds of Shopify shareholders. Shareholders of record as of the close of business on April 19 will be eligible to vote on the proposals at Shopify’s annual meeting. Shares of Shopify have fallen more than 50% year-to-date at press time.