Now - as MacDougal Post readers know - corporate elites have been skimming investor savings into their big fat overstuffed pockets with “stock option” swindles and the like since 1981, and due, at least in part, to the compensation packages at Google, instead of that 324.9 million total above, 327.1 million average diluted shares were used to calculate 2011 fully diluted earnings per share (for some reason(s) Wall Street analysts seldom choose to share with you and me in any of the countless reports they spit out).
Anyway, Class A owners (you, me, and the rest of the suckers out there) get 1 vote per share, and Class B (them) 10, so voting control of Google as of December 31, 2011 broke down as follows:
Us: 28% (257.6 million votes)
Them: 72 (673 million votes)
Total 100% (930.6 million votes)
Ownership, however, looked like this:
Us: 79% (257.6 million shares)
Them: 21 (67.3 million shares)
Total 100% (324.9 million shares)
On April 12, Google management announced they would create a third class of stock, non-voting this time, named Class C, and issue one new Class C share for each Class A and Class B share held. This won’t change the percentages in the previous tables, so we’re not going to bother recalculating the parentheticals for you.
So why non-voting?
Well, over time the mounting total of new shares issued to non-founding employees in stock option swindles would threaten voting control unless management bought the stock back with company cash, money which would otherwise finance growth. American corporations facing that problem generally just go ahead and screw their public shareholders by doing buy-backs anyway. If Google management now chooses to compensate non-founding employees with non-voting stock, they won’t have to retire those employee “stock option” issuances by dipping into that cash, freeing the funds to help finance their future, the way things used to be before 1981. Possibly equally important, depending on how much merger and acquisition (M & A) activity the years ahead bring, shares used for M & A transactions also chip away at control, (though any cash spent there is, in fact, channeled into growth), and non-voting stock issued in such pursuits would solve that part of the control problem at Google as well.
On the other hand, that flow of cash has proven to be a limiting factor at U.S. corporations. Past stock option swindles have typically been held to the number of shares companies can retire with generated cash, specifically that amount management has chosen to divert to itself from shareholder savings. If this non-voting thing takes, and insiders seize on it as an opportunity to balloon “stock option” swindles, our guess is, the practical limitation on the magnitude of their looting no longer holds.
Pilfering relatively small numbers of shares each year, it took the 1% two or three decades to loot our entire 1980 savings with their “stock option” racket, basically transferring a huge part of what we would’ve been leaving to our children into the thieving b$st$rd$’ hands. With non-voting shares, looks to us like the crooks have come up with a way to do that quicker. Much quicker, in fact.
Maybe Google doesn’t have that on their minds. Who knows? But surely they’re opening the door. Like the “stock option” itself, this is too sweet a swindle for the MBA mind to turn away from, especially the element who enroll with larceny on their minds, and with the curtain of inadequate disclosure pulled down snugly around executive compensation schemes these days, the risk of investing in U.S. equities has just been raised to exasperating levels.
Any reason we may have had to stray from American icons may have just been trumped by Thursday’s announcement, one The Post deems outrageously hostile to an investment community already reeling from more than three decades of egregious stock option racketeering.
“We have never declared or paid any cash dividend on our common stock. We intend to retain any future earnings and do not expect to pay any dividends in the foreseeable future.” – Google 2011 Form 10-K
