Cofounders Logan Green and John Zimmer could own just 2.65% of Lyft and retain 35% of the votes—here's why researchers say it's bad for shareholders.
Lyft President John Zimmer and CEO Logan Green could own less than 5% of Lyft's equity and still have nearly 50% of its voting power.power structure, which gives founders Logan Green and Josh Zimmer a concentration of voting power,"can be expected" to decrease Lyft's share value in the future, according researchers at Harvard Law.
They could also retain significant control while owning as little as 2.65% of the company's equity, the researchers found. Lyft shares closed at $74.55 on Friday, nearly $4 below its first trade when the company went public on March 29. While the stock has seen a slight recovery from its all-time-low of $66 in its first week of trading, Wall Street isn't quite certain on how to treat the stock in the long-term.
At the heart of their argument is Lyft's dual-class share structure. Shareholders that buy Lyft's stock on the public markets buy Class A shares, which come with one vote each. This is compared to the Class B shares that make up the majority of Green and Zimmer's respective holdings. Lyft's Class B shares each grant 20 votes on the holder.Following the IPO, Logan and Zimmer had an"absolute lock" on power while owning just 4.96% of Lyft's equity.
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