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Dual class stock structure

Marc Andressen was praising dual-class stock structures in light of the Microsoft-Yahoo food fight. Rather than a dual class structure that is explicitly assigned to a certain stock certificate, I prefer AFLAC’s variation.

AFLAC has an interesting variation on this. They have a dual class structure but it is based on how long the stock has been owned in your name. If you have held the a share for 4 years in your name (i.e. not your stock broker’s name like is usually the case) then that share has 10x the vote as a share that has been held for less than that time. Stock plan document (item 18 on page 12)

This is the perfect poison pill defense. A “short term” speculator would have to hold the shares for 4 years in order to have a chance at a hostile takeover. A shareholder who has held the shares for 4 years clearly is invested in the company as a company not just a speculation vehicle.

At the same time this is extremely democratic, anyone could get the class B status by simply being a buy-and-hold investor.

Posted in starting a company.


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