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Investor Blasts Google Vote Structure

April 13, 2006|From Bloomberg News

A Google Inc. institutional investor wants the company to give equal voting rights to all shareholders, saying the current structure reduces management accountability.

The Bricklayers & Trowel Trades International Pension Fund, which owns 4,735 shares, wants to eliminate a class of stock that gives founders Larry Page and Sergey Brin and Chief Executive Eric Schmidt 10 times the voting rights of other holders.

"This disproportionate voting power presents a significant danger to shareholders," the pension fund said in a proposal in Google's proxy statement filed Wednesday with the Securities and Exchange Commission. "Dual-class voting stocks like our company's reduce accountability for corporate officers and insiders."

The Mountain View, Calif.-based company has urged shareholders to reject the proposal.

Google, the world's most popular Internet search engine, created a two-tier system before the company sold shares to the public in August 2004.

Insiders including Brin, Page and Schmidt hold Class B shares that give them and other insiders almost 80% of the voting power, according to Google's SEC filing.

At the time of the IPO, Brin and Page said in a letter to prospective investors that a dual-class share structure would provide stability and reduce the risk of a hostile takeover.

"We want Google to become an important and significant institution," they wrote. "That takes time, stability and independence."

Shares of Google declined 71 cents to $408.95.

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