A Mad Tea-Party

           Lets say a public corporation had 324.9 million shares of common stock outstanding at year-end 2011, and 257.6 million were Class A shares issued to public investors and 67.3 million were Class B shares held by company insiders, and Class A had one vote per share and Class B had 10 votes per share, so that company insiders held 72% of the voting control even though they had sold what then amounted to 79% of the ownership interest to their outside stockholders.


           Furthermore, lets say management wanted to rob these Class A suckers blind with an egregious stock option swindle, and to do so, just announced a brand new issue of Class C Common Stock, and said they were distributing one Class C share to each Class A and Class B share.  Now if you’ll excuse us for pulling a number out of the blue, lets dare to hypothesize that said lowlifes were going to start paying themselves and their cronies equity compensation packages totaling 20% of Class C shares every year, and wanted to do it this way so the founders and them could loot 10% of the total wealth invested in the outfit annually, and the founders wouldn’t have to spend a dime of company cash retiring any equity compensation shares in order to maintain their voting control, keeping the founders and presumably their descendants too, in position to rip off public investors until the end of time, unless, of course, the robbers ran out of descendants first.


           Why don’t we take a look at the proformas?


           Adjusted for the announced 1 for 1 non-voting share stock manipulation, the December 31, 2011 capital accounts shown in the 2012 Form 10-K would break down like this, "us" being you and I and the rest of the suckers, and "them" being the crooks:


                                      Common Stock Outstanding
                                       Year-End 2011 (in Millions)
                                          Total      Non-
                   Ownershiip    Shares   Voting    Voting
Us:                    79%          515.2     257.6     257.6
Them:               21             134.6      67.3        67.3
Total               100%          649.8    324,9      324.9


           Paying their corporate elite and corporate elite wannabes 20% of the non-voting class as equity compensation each and every single year, after a decade the swindle would pump that issue up to more than two billion, eleven million shares, and change, as follows:


                   Non-Voting Stock
                Issued      Outstanding
              Annually      on Dec 31
2011        324.9           324.9
2012          65.0           389.9
2013          78.0           467.9
2014          93.6           561.4
2015        112.3           673.7
2016        134.7           808.5
2017        161.7           970.1
2018        194.0        1,164.2
2019        232.8        1,397.0
2020        279.4        1,676.4
2021        335.3        2,011.7


           Since all the non-voting shares issued from 2012 to 2021 would go to corporate elites and corporate elite wannabes, the ownership change, or looted public savings, would be dramatic over the decade.  Management can, and typically does, obscure the more egregious “stock option” atrocities committed inside our lawless financial system with merger activity, throwing enough new shares from that source into the mix to pass off public savings looted by executive compensation packages as de minimus.  It’s easy for perps in various criminal enterprises to seek each other out, jointly burying their “stock option” shenanigans inside larger reported numbers with two strokes of a pen and several hundred corporation lawyers.


           This hypothetical example is so blatantly immoral, management would probably be driven to mess further with the Class C currency they've monetized, as in reverse stock splits down the road, or a whole new Class D creation, the specific purpose of which can only befuddle a lawful mind until such time as that Class D is structured and at large.


           Without cooking the books through merger deals, or retiring new shares via stock buy-backs, or whatever, the December 31, 2021 capital accounts here would look like the following, so we wouldn’t expect them to.  Clearly, mergers (and maybe some buy-backs) would have to shroud these numbers in totally inadequate disclosure.   Note how public wealth, as represented by percentage ownership in the first and third tables, would be plundered to the point of utter devastation, as pilfering 10% of it for 10 years is wont to do.


                                         Common Stock Outstanding
                                          Year-End 2021 (in Millions)
                                            Total         Non-
                   Ownershiip      Shares      Voting     Voting
Us:                    22%            515.2        257.6      257.6
Them:               78            1,821.4     1,754.1        67.3
Total               100%         2,336.6     2,011.7      324.9


           Beneath all the malfeasance, of course, voting control would remain unchanged.  Since this particular evil would be unleashed through non-voting Class C shares, the voting Class A and Class B share tallies would stay the same:

Us:         28%   (257.6 million votes)
Them:    72      (673 million votes)
Total     100%  (930.6 million votes)




           “Then you should say what you mean,” the March Hare went on.
           “I do,” Alice hastily replied;  “at least – at least I mean what I say – that’s the same thing, you know.”
           “Not the same thing a bit,” said the Hatter.
                              - Lewis Carroll, Alice’s Adventures in Wonderland