(Reuters) - A U.S. senator has asked exchange operators NYSE Euronext and Nasdaq OMX Group to consider proposing rules that would require the companies that list their shares with them to have “one share, one vote” corporate structures.
Some companies have multi-class voting structures that give certain classes of shares, such as those held by founders and initial executives, multiple votes per share.
Such structures give many average investors limited discourse in holding management and the board accountable if the company heads in a wrong direction, Massachusetts Democratic Senator Elizabeth Warren said in a letter to the exchanges on Wednesday. (Link to Warren's letter: link.reuters.com/sem68t)
“If a company goes to the public markets to raise money, long-term ordinary common stock investors - a category that includes directly or indirectly millions of retirees and workers - should be entitled to basic rights,” she said. “One of the most basic of those rights is one-share-one-vote.”
Representatives at NYSE and Nasdaq declined to comment.
Warren, a member of the Senate Banking Committee, said the number of public companies using multi-class stock structures has risen sharply in recent years.
The Council of Institutional Investors wrote a letter to the exchanges on October 2 asking them to require one-vote-per-share. Many mutual fund providers, including Fidelity and Vanguard, oppose the introduction of new classes of stock with unequal voting rights, Warren said.
Prior to being elected in November, Warren led a congressionally appointed panel tasked with keeping an eye on the government’s bailout of the financial system. She also championed the creation of the Consumer Financial Protection Bureau, which was created by the 2010 Dodd-Frank oversight law and which she set up.
Reporting by John McCrank in New York; Editing by Carol Bishopric