84. Is it time to re-think dual-class share structures?

SCRIPT It’s November 2021 and if you’re Canadian like me you haven’t been able to ignore the recent stream of headlines about the drama unfolding in a particular iconic Canadian company that happens to have a dual-class share structure. For the non-Canadians out there, basically all of the headlines are drawing analogies between this company and the TV series Succession. It may surprise some of you that I haven’t found the governance angle to this whole thing very interesting – really it boils down to whether the controlling owner had the votes to do what he wanted to do and the answer turned out to be “yes”. Setting aside how hard the conflict must be for the executives and family members involved, the question I want to address here is “do dual-class share structures increase the risk of BAD governance?” I’ve seen op-eds on both sides of this debate – and I talked about it a bit way back in episode 12. Let’s be clear here: awful corporate behaviour is not exclusive to dual-class public issuers. In fact, if you made a list of the first five most salacious corporate catastrophes that come to your mind, they’re probably all WIDELY-HELD, single-class listed companies. Plus maybe Theranos, which also wasn’t dual-class. So for any of you governance nerds or business reporters out there who take every chance you can to complain about dual-class structures, I’ll be more likely to buy the argument if I see the occasional headline about getting rid of SINGLE class structures.