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Technology Stocks : Alphabet Inc. (Google) -- Ignore unavailable to you. Want to Upgrade?

To: MJ who wrote (157)	5/4/2004 8:01:23 AM
From: Glenn Petersen	Respond to of 15851

this prevents a takeover by unfriendly raiders assuming a controlling interest in the company, promising the sky to stockholders and leaving the stockholders in the lurch. The flip side of this argument is that the structure leaves management unaccountable. Generally, this is a bad idea. I don't think that this issue will have any significant impact on either the marketing or the pricing of the deal. I do heartily applaud their stated intent to manage for the long-term, quarters be damned. US fund criticises Google's share structure financialtimes.printthis.clickability.com By Simon London in San Francisco Published: May 3 2004 22:16 One of the largest US pension funds has said that shares in Google should be priced at "a substantial discount" to reflect the fact that insiders will retain control of the internet company following its initial public offering. TIAA-Cref, the New York-based teachers' pension fund with $300bn under management, said that corporate governance weaknesses would be reflected in the price it was willing to pay for Google stock. "There should be a substantial discount for corporate governance deficiencies," said Peter Clapman, senior vice-president and chief counsel for corporate governance. He declined to speculate on how wide the discount should be. Google last week unveiled plans for an IPO that is expected to raise $2.7bn and could value the company at more than $30bn. The company said that while outside investors would be offered Class A shares, which carry a single vote, insiders led by Larry Page and Sergey Brin, Google's founders, would retain effective control of the company through their holdings of Class B stock, which carry 10 votes per share. "This structure effectively disenfranchises outside shareholders," said Mr Clapman. His comments add to the general disapproval that Google has faced since unveiling its plans. Bob Monks, the doyen of US corporate governance activists, last week described the share structure as "stupid" and Google's founders as "poorly advised". Not all investors agree, however, that the structure is a bad idea. At the weekend, Warren Buffett said he was "very pleased" to see Google's founders following an approach that he had adopted for his Berkshire Hathaway investment company. Google's decision to structure its IPO as an auction leaves investors free to weigh corporate governance concerns against its strong growth prospects. Dual class share structures are rarely seen in the US. While such arrangements are more common in continental European countries, they are on the wane following concerted criticism by institutional investors. In regulatory filings, Mr Brin and Mr Page said the capital structure would enable them to take a long-term view and ensure that its internet search engine remained insulated from commercial pressures. They pointed out that some US media groups used dual class share structures to protect the editorial independence of their newspapers. Mr Clapman said TIAA-Cref would not be swayed: "Google is just another way to make money out of the internet. The public is entitled to one share, one vote."