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• Proposes to issue ‘Founder share’ to CEO Tobi Lutke, which will have variable stake ownership to retain 40% voting power
• Shopify to split both class A and class B shares in a 10 to 1 ratio
Canadian e-commerce giant Shopify Inc (NYSE: SHOP) on Monday announced a 10-for-1 share split, joining a growing list of companies that have split their shares to make them more attractive to investors.
Shopify is also planning to seek shareholder approval to authorize and issue a new class of shares, called the “Founder share”, to its CEO and Founder, Tobi Lutke.
The e-commerce giant said that the new structure would “strengthen the foundation for long-term stewardship” by Lutke.
Under the proposal, Lutke, his family, and his affiliates would together retain 40% of the voting power at the company, even as their ownership stake changes.
However, the company said that Lutke would hold the Founder’s shares until he is an executive at Shopify or a board member.
US-listed Shopify shares jumped over 3.6% to $624.99 in the New York trading session, while they were up 3.7% to C$786.10 on the Toronto Stock Exchange.
Shopify’s market valuation soared above C$250 billion ($198 billion during the pandemic as online selling took off, but it has given back most of those gains, as the shares are down 56% this year amid the tech share selloff.
The company will split both class A and class B shares in a 10 to 1 ratio, where class A shares carry one vote per share, and class B shares have ten votes per share.
Other stock split announcements this year came from e-commerce giant Amazon.com Inc (NASDAQ: AMZN), Alphabet Inc (NASDAQ: GOOGL) as well as videogame retailer GameStop Corp (NYSE: GME).
Tesla Inc (NASDAQ: TSLA) also had said it would seek shareholder approval for a stock split.
Picture Credit: CNBC
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