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Jun 7, 2022

Shopify's Lutke wins new voting rights on shareholder ballot

Shopify not instilling best governance practices with 'founder share' plan: CFRA analyst

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Shopify Inc. investors have agreed to grant Chief Executive Officer Tobi Lutke special voting rights, securing his influence at the e-commerce software company he founded. 

Shareholders voted in favor of a proposal to create a “founder share” for Lutke, ignoring the advice of two prominent advisory firms. The change guarantees Lutke at least 40 per cent of the voting rights at the company under certain conditions, including that he stays with the company. 

Shopify had argued that the proposal would benefit shareholders by ensuring Lutke maintains an active role at the Ottawa-based firm. He isn’t allowed to pass the founder share on to anyone. 

To pass, the proposal required a majority of the votes cast by shareholders, excluding the shares he controls.

Shopify announced the proposal in April. Several weeks later, shareholder advisory firms Glass Lewis & Co. and Institutional Shareholder Services Inc. urged investors to reject it. The California Public Employees’ Retirement System had indicated it would vote against the proposal.

Shareholders also voted in favor of a 10-for-1 stock split.

Shopify rose 2.6 per cent to US$370 as of 10:36 a.m. in New York. The shares have dropped 73 per cent this year.