Shopify Inc. is proposing changes to its governance structure to preserve founder and CEO Tobi Lutke’s voting power, but provide sunset provisions that prevent him from transferring that power.
Under the new plan, Shopify will issue Lutke a 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.
The founder share will not be transferable and 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 plan requires approval by a two-thirds majority vote cast by Shopify shareholders voting together as a single class and at least a majority of the votes cast by shareholders excluding Lutke and his associates and affiliates.
The company is also proposing a 10-for-one split of its class A and class B shares. The share split requires approval by a two-thirds majority vote by the class A and class B shareholders, voting together as a single class.
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