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Maybe the vote strength should instead go with the period of lockup instead? That is, I agree to hold my shares for ten years, so I get ten votes.
Perhaps it could even be slightly nonlinear with respect to the length of time? (years * 1+log(years)) or similar?
Edit: LTSE reminds me of LTCM. Not a great connotation?
How would this work with someone pulling something similar to Altaba? Suppose you have $1B worth of stock, and 10% of the value is in the vested voting rights that you'd lose by selling it. Instead of selling part of it on the open market, you sell shares in a shell corporation that holds that stock. Surely the discount in ShellCorp's stock price compared to UnderlyingCorp is less than 10%? And the cost of setting up…
Though it might have the interesting side effect of fund managers who exercise their voting rights being better compensated and staying in their jobs longer...
[1]possible to devise some kind of unusual contractual arrangement where the "beneficial owner" retained formal title to the shares but accepted an obligation to both hand over stock yields and vote in the interests of the other party. But this is something you could effectively ban.
My gut sense is that the important time period is length of hold going forward, not length of past hold. Maybe the vote strength should instead go with the period of lockup instead? That is, I agree to hold my shares for ten years, so I get ten votes. Perhaps it could even be slightly nonlinear with respect to the length of time? (years * 1+log(years)) or similar? Edit: LTSE reminds me of LTCM. Not a great connotatio…
My gut sense is that the important time period is length of hold going forward, not length of past hold. Maybe the vote strength should instead go with the period of lockup instead? That is, I agree to hold my shares for ten years, so I get ten votes. Perhaps it could even be slightly nonlinear with respect to the length of time? (years * 1+log(years)) or similar? Edit: LTSE reminds me of LTCM. Not a great connotatio…
Forget all the practical hurdles, tell me why this premise is even correct. Just because I've owned a share for a long time, that implies that I have more interest in the long term performance of the company going forward? Just because the word "long" is part of the description of a past action doesn't mean it's in any way correlated with an expected future action. And it's often negative. See: basketball games, reti…
As in: Do not worry about quarterly profits but longterm success
"Skeptics wonder whether the LTSE is just another way for tech founders and elite Silicon Valley investors to maintain control at the expense of other shareholders."
My gut sense is that the important time period is length of hold going forward, not length of past hold. Maybe the vote strength should instead go with the period of lockup instead? That is, I agree to hold my shares for ten years, so I get ten votes. Perhaps it could even be slightly nonlinear with respect to the length of time? (years * 1+log(years)) or similar? Edit: LTSE reminds me of LTCM. Not a great connotatio…
Reducing the complexity of the real world -> If only shares held for a long term have full rights, you will obfuscate how you pay for those rights. either the stock will have a depreciated market price to what it 'should' trade at or the voting rights will be acquired through rent seeking by long-term holders.
How would this work with someone pulling something similar to Altaba? Suppose you have $1B worth of stock, and 10% of the value is in the vested voting rights that you'd lose by selling it. Instead of selling part of it on the open market, you sell shares in a shell corporation that holds that stock. Surely the discount in ShellCorp's stock price compared to UnderlyingCorp is less than 10%? And the cost of setting up…
Perhaps you'd tie voting rights to a named human beneficial owner, so the prospective purchaser of your shell corporation wouldn't inherit them[1] Though it might have the interesting side effect of fund managers who exercise their voting rights being better compensated and staying in their jobs longer... [1]possible to devise some kind of unusual contractual arrangement where the "beneficial owner" retained formal t…
Interesting idea, but seems impractical because it causes very weird incentives: * Can a company exist in both the "normal" exchange and the "long term" exchange at the same time? If so, can I short on the normal exchange and buy on the long term exchange for some free voting power that increases over time? * Many (most?) consumer-facing brokerages make a significant portion of their revenue by lending out their cust…
> Can a company exist in both the "normal" exchange and the "long term" exchange at the same time? The fact that a company is listed on multiple exchanges doesn't mean it has different sorts of stock for each exchange. This real subject of this article is tenure voting , which is an aspect of the stock (not the exchange). The reason exchanges are mentioned is that exchanges have rules about the sorts of stock they wi…
You've essentially just described the current system. Most shares on NASDAQ and NYSE etc. are technically held by Depository Trust Company via its nominee, Cede & Co. [1]. Through a complicated set of regulatory and contractual arrangements, public companies, the beneficial owners of their stock (i.e. the investor at the end of the chain) and each intermediary (banks and brokers, etc.) all maintain a sort of legal fiction that the shares are "owned" by Joe Schmoe, even though all he really has is an attenuated set of contractual rights that flow through the various intermediaries between him and "his" shares held by Cede.
Joe Schmoe does not technically or legally own those shares. Cede does. Believe it or not, you were spot on in predicting that the third party would allow "voting by proxy." That's exactly how Joe Schmoe (i.e. all of us) must vote our shares if we want to participate in a stockholder vote. We can't just show up at the meeting (or fill out the company's proxy card). You send a "voting instruction form" telling your broker how you'd like to vote, and your broker then tells Cede & Co. how to vote your shares at the stockholder meeting.[2]
To address your specific point, tenure voting would surely be based on the tenure of the beneficial owner (i.e. the person at the end of the chain who gets to vote) not the nominee holding the shares in "street name" on the beneficial owner's behalf. This might take some reworking of the arrangements between the brokers, DTC, clearinghouses, etc. (likely needing to be be built into the financial systems that log transfers and ownership, if not already provided for) but would not really pose a significant barrier.
[1] https://www.bloomberg.com/view/articles/2015-07-14/banks-for... [2] https://www.sec.gov/spotlight/proxymatters/proxy_materials.s...