More than 115 cases of eye damage reported in Ontario after solar eclipse
More than 115 people who viewed the solar eclipse in Ontario earlier this month experienced eye damage after the event, according to eye doctors in the province.
Shopify Inc. is proposing changes to its governance structure to preserve founder and CEO Tobi Lutke's voting power, while also proposing a 10-for-one split of its class A and class B shares.
Under the new plan announced Monday, the Ottawa-based e-commerce company will issue Lutke a non-transferable founder share that will have a variable number of votes that, when combined with his other holdings, will represent 40 per cent of the total voting power attached to all of the company's outstanding shares.
However, the founder share will sunset if Lutke no longer serves as an executive officer, board member or consultant whose primary job is with the company or if Lutke, his immediate family and his affiliates no longer hold a number of class A and class B shares equal to at least 30 per cent of the class B shares they currently hold.
In the event of a sunset of the founder share, Lutke will also convert his remaining class B shares into class A shares.
The shakeup comes as Shopify's stock has experienced a significant slump in recent months, after surging following the onset of the COVID-19 pandemic.
Yet Lutke, who started Shopify with an investment from father-in-law Bruce McKean in 2004, when he was unable to find e-commerce software for a snowboard business he was building, remains at the helm.
If Monday's "unprecedented" proposal is approved, more control over the company could eventually be wrested away from Lutke and handed to common shareholders, said Richard Leblanc, a professor of governance, law and ethics at York University.
Shopify estimates that if the conversion were completed Monday the total voting power held by class A shareholders would increase to roughly 59 per cent from about 49 per cent.
"This is so unique ... because most of the time the founder thinks they're going to live forever and they don't want to relinquish control," Leblanc said.
"There's many companies in Canada that end up in the hands of children and other family members and there are studies that suggest that ... the more you bequeath to a family member, the less effective that family member becomes because they don't have the same experience and drive that the founder had."
The arrangement would also prevent a power struggle from unfolding within the founder's family like telecommunications giant Rogers Communications Inc. saw last year, Leblanc said.
Edward Rogers, the son of founder Ted Rogers, was able to replace five board members over objections from other directors, including his mother and sisters, in October because he controlled 97.5 per cent of the firm's class A shares.
Leblanc believes more companies will follow Shopify's lead, especially after the public Rogers battle, because "there's an increasing intolerance by investors for absolute control by family members."
Shopify's proposal is the result of a board process it said was conducted under the supervision of a special committee of independent directors.
It framed the move as a way to "modernize" Shopify's governance structure, align it more closely with long-term market opportunities and follow the company vision Lutke outlined in a 2015 public letter, where he prioritized long-term value over short-term revenue opportunities.
That ethos has extended to the stock price. Lutke is known for requiring anyone at the office caught checking the company's stock price during the day to purchase Timbits for their team.
Those that took a peek likely noticed Shopify's stock has been more than halved over the last year. It sat at $780.02 by the end of trading on Monday, down from a closing high of $2,139.82 in November.
As of July, the company will begin giving staff a "total rewards wallet" that allows them to choose between cash and stock options for their compensation, Shopify spokesperson Rebecca Feigelsohn said in an email.
The share split requires approval by a two-thirds majority of shareholders and at least a majority of the votes cast by shareholders excluding Lutke and his associates and affiliates. The matter will face a vote on June 7.
If approved, Shopify director John Phillips will convert all class B shares held by Klister Credit Corp., a company the early investor owns with psychologist-wife Catherine Phillips into class A shares.
Shopify also announced Monday that it purchased Dovetail, a software company behind a creator management system, for an undisclosed total.
This report by The Canadian Press was first published April 11, 2022.
More than 115 people who viewed the solar eclipse in Ontario earlier this month experienced eye damage after the event, according to eye doctors in the province.
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