Shopify and the Problem of Shareholder “Approval” at Multi-Class Companies - Glass Lewis

the Role of Proxy Advisors & The handful of proposals that fail understandably draw headlines – yet many proposals opposed by a majority Challenges in the AGM Voting of shareholders y under the radar. [...] For so long as the founder share exists, the election of any Shopify director favored by the CEO is effectively guaranteed, thanks to the effective control that 40% of voting power represents in practice. [...] By contrast, under a multi-class structure, voting control doesn’t require a commensurate level of economic exposure, exacerbating the potential for conicts between the long-term health of the business and the best interests of the “controlling” party. [...] Lütke to focus on driving sustained performance” and that the dollar value of the award was reached after “reviewing various factors, including the annual CEO pay level of our compensation comparator group.” In making the comparison, the committee does not appear to have even 2/4 . [...] Aligning Risks & Rewards At least some of the mufed shareholder opposition to Shopify’s compensation proposals likely reected the signicant level of economic dilution that (most) of the company’s investors are exposed to as a result of equity grants, with the long-term incentive plans allowing for the issuance of up to 31% of issued share capital.