So Google is a nepotistic den of "forever shares" firmly in the hands of Google leadership. And you thought capitalist royalty was different from feudal royalty, when they just recreated the same hereditary shit:
That Harvard study should be a wake-up call to anyone who raised their kids in wealth and thinks their pampered children are going to be smart and capable to run a company just like them. Children are not carbon copies of their parents.
Experts have been expressing concerns about the risk of the “nepo baby” in corporate governance long before the term took hold of the internet. Even if you don’t hold shares, you may want to consider how inherited control could impact the brands you love and rely on — here’s what you need to know.
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Several hundred companies in the U.S. employ dual-class stock ownership structures, which allows them to pass down super-voting shares through the family.
Most public companies have a single-class stock structure, meaning one stock equals one vote.
In contrast, a dual-class stock structure allows for two or more classes of shares, one which can hold comparatively more voting rights than the others. This empowers corporate executives to benefit from public investment in their company while maintaining perpetual control and limiting the investor’s power.
Former SEC commissioner Robert J. Jackson Jr. warned in 2018 that these forever shares “don’t just ask investors to trust a visionary founder. It asks them to trust that founder’s kids. And their kids’ kids. And their grandkid’s kids.”
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Alphabet subsidiary Google is the most famous example of a company with a dual-class structure. Class B shares reserved for Google insiders carry 10 votes, while ordinary Class A shares (GOOGL) sold to the public get just one vote, and Class C shares (GOOG) have no voting rights.
As of 2021, founders Larry Page and Sergey Brin controlled approximately 51.4% of the company’s voting power via “super-voting” shares, according to Capital.
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The trouble, as Jackson pointed out back in 2018, is that asking investors to put eternal trust in corporate royalty is antithetical to the values of Americans.
“It raises the prospect that control over our public companies, and ultimately of Main Street’s retirement savings, will be forever held by a small, elite group of corporate insiders — who will pass that power down to their heirs,” he said.
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And then there’s the matter of merit. What happens when the lock on control is passed to a nepo baby who’s not a fitting leader? Someone who’s not as able, talented, skilled or driven as their predecessor?
A Harvard Law Discussion paper dubbed this the problem of the idiot heir. Citing evidence from another study, researchers have pointed out that competitive contests for top executive roles would rarely result in a family chief executive officer. That’s because they’d be overshadowed by their non-blood-related competition.
When the ‘idiot heir’ brings down the entire empire: Corporate royalty may keep the company bloodline strong, but it can pose a real threat to the rest of us
Gen Z may be obsessed with nepo babies in Hollywood, but they should really be focused on Silicon Valley.finance.yahoo.com
That Harvard study should be a wake-up call to anyone who raised their kids in wealth and thinks their pampered children are going to be smart and capable to run a company just like them. Children are not carbon copies of their parents.
