Google Stock Splits

A little more than a year ago, Google announced a stock split. This was done in an effort to be able to sell more shares, but they weren’t able to carry out their plan because of a legal dispute.

Now, however, a major obstacle to bringing the split to fruition has been carried out with the announcement of a settlement between Google and objecting shareholders.

First announced in April 2012, the split was agreed upon by shareholders two months later – largely because it had the blessings of CEO Larry Page, Chairman Eric Schmidt, and co-founder, Sergey Brin.

However, a group of shareholders who were against the split sued. But this month, a settlement between Google and the dissenting shareholder group was announced. As part of the settlement, Google will consider using stock with voting rights as part of future acquisitions (as opposed to stock without any voting power). Additionally, should Page and Brin begin to sell off their stock, Google will consider doing away with their multi-class stock concept.

Once in effect, the Google triumvirate of Pate, Schmidt and Brin will control 64% of Google shares.

In one sense, the split is typical, in that Google will award two shares for every share owned by their current shareholders – with the price of each share dropping by 50%. But that is where the normalcy ends. Once the split happens, owners of any new Class C shares will not have any voting powers.

Once Google files the settlement proposal and it goes to court for final approval, their stockholders will then be given an opportunity to review it.

Google is preaching patience to its shareholders, citing many more successes than failures in the company’s history. There is surely merit in that line of thinking, as Google stock hit an all-time high in May.