With great power comes responsibility. With a 59% interest, Larry and Sergey had absolute power over Google, and therefore absolute responsibility. Perhaps the move in China led some to believe that this is too much power. 52% enables the remaining shareholders to overrule Larry and Sergey's decisions -- in theory. In order for this to occur, virtually all the remaining shareholders would need to reach unanimous agreement against a decision made by Sergey and Larry -- highly improbable, but possible. Without absolute power, there is no absolute responsibility. Conveniently, this also aligns with a liquidation of billions of dollars.
Nice idealistic thoughts, but the board of directors controls a company. Share holders can't do much except for vote for whomever they put on the proxy.
I think your comment reduces to "The board of directors controls a company, and shareholders have the power to vote for members of the board of directors". I agree. And before this event took place, 59% of shareholders votes were held by Sergey and Larry. This means that Sergey Brin and Larry Page held the majority of shareholder votes.
In theory yes. But let's say 80% of company X shareholders wanted a large one time dividend payout but the executives of company X don't want to do it.
At the next board election they simply choose two candidates but both who agree with what the executives want.
That almost sounds like a press release. Generally, "absolute power" is divested through the application of force, which begs the question of who/what forced the issue.
Why would Brin and Page sell enough shares to lose their majority vote? Google's IPO, and their insistence on keeping control of the company via two classes of shares seems contradictory to this move.
Obviously they don't need the money, and don't need to diversify their holdings to have a luxurious life. So why do it?
Also, a majority share held by Brin and Page was what was supposed to keep Google from doing evil.
"don't need to diversify their holdings to have a luxurious life".
Good point, but they do need to diversify to fund billions on the kind of change-the-world projects that they've expressed interest in in the past:
a) Alternative energy.
b) Genome / disease research & mapping.
c) etc.
The recent mega-philanthropy of gates / buffet / etc people @ the top realize that they have a chance to alter the course of human history in other ways that may require a ton of capitalization (vaccines, health, disease, geneome mapping, etc).
It's risky. If their new investments don't make any money, and google drops in valuation, they could be forced to sell a larger portion of their stake.
The danger in this is that it is quite possible that at ~36 P/E Google is near the upper limit of its practical valuation for the near future. If they borrow big against their holdings then they have to pay back the loan and also service the debt. If the share price drops then they would have to sell even more shares to cover the loan. As it stands now they will still have such a huge chunk of voting rights that it would take near unanimity against them to overturn their decisions and in return they get big piles of cash that they can probably get a better return on by placing bets on other ventures.
48% of the vote is well above what would be required to control google, especially considering that google probably has a high fraction of individuals holding their shares who don't usually vote their proxies. I don't begrudge these guys their diversification at all, I doubt the market does much either.
I've never understood this impulse to try and divine a market's reaction to news from a 1-day timespan. Especially for move like this, where the effects in corporate governance might not be seen for some time, wouldn't the better indicator of how well-received it is be the stock price after 3, 6, 12 months? Aren't these just big fund managers making snap judgments and moving sums around for the biggest bang?
Actually, more likely it's a few hundred different automated trading systems all playing off each other. If you're managing a pension fund, volatility is the last thing you're after.
It's a smart play to do it now when GOOG news is almost overwhelmingly positive (high earnings etc) so they can say "wealth diversification" and not have people question their motives. . .
I would cash a few billions too, if I had the chance. It would allow me to do things like Bill & Melinda Gates do with their charity funds. Maybe Sergey Brin plans to eradicate malaria from the world and save millions of children each year? Maybe Page wants to use his billions to preserve precious rainforests by buying the land these forests are standing on? After they made this great company, maybe their ambition is to make great impact on the world, too.
OMG they are reducing their ownership from 15 percent from 18 percent! FUD!
Seriously though, why would you want to leave it all tied up in there and be a billionaire just on paper. Well unless you're Warren Buffet who has never sold a share of BRK except to gift to the Gates foundation... Or Ellison who just takes multi billion $ loans out against his equity pile.
