Twitter’s initial public offering highlights many of the social network’s differences from rivals like Facebook. But the company’s prospectus highlights one unexpected change: the lack of multiple classes of stock.
Instead, shareholders will all have a single vote on corporate matters.
That marks a big change from the big Internet I.P.O.’s of the last several years, in which companies rolled out multiclass stock structures aimed at preserving control for the company’s founders. Facebook, Groupon and LinkedIn all featured two classes of stock; Zynga, the game maker, went further and unveiled a highly unusual triple-class system, including a tier meant solely for its founder, Mark Pincus./p>
Such structures have been around for some time, often used at companies where controlling families wish to maintain control. (The New York Times Company is among them.) But the systems have drawn criticism for being unfriendly to regular shareholders.
In theory, then, Twitter would be considered more open than others in the latest generation of Internet companies. But the company still plans to institute other means of protecting itself against hostile takeovers and activist investors. Twitter will have three classes of directors who are elected in different years, making it significantly more difficult to replace the board in one fell swoop.
Twitter also disclosed that its certificate of incorporation and its bylaws also contain provisions that limit shareholders’ ability to call special meetings and control the procedures for any investor meeting. Those governing documents will also let Twitter issue “blank check†preferred shares that could give holders of those securities more power than common stockholders.
“These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management,†the company wrote in its prospectus.
