Stephen Lam/Reuters Logan Green and John Zimmer co-founded Lyft in 2012.
- Lyft will have two classes of stock when it goes public this year, it said in documents filed Friday.
- Class B shares, held by executives including the two founders, will have 20 votes while traditional Class A shares hawked to new investors will have one vote each.
- Most tech companies that go public now are using a similar structure, and some organizations have pushed back against the growing trend.
There's a growing trend among tech companies when they go public: keeping power in the hands of founders.
Lyft's public filing of its S-1 document on Friday has proved no exception.
According to the prospectus, Lyft's IPO will feature a dual-class share structure that gives founders Logan Green and John Zimmer "significant influence over matters requiring stockholder approval, including the election of directors and significant corporate transactions, such as a merger or other sale of our company or its assets."
The document does not say the exact percentage of Class B stock - shares of which get 20 votes each compared to Class A's one -but does show that the founders along with other executives also own about 27% of outstanding Class A stock.
According to a Wall Street Journal Report, the company is are working on a plan that would give them near-majority control of the app-based car ride firm after its initial public offering. A spokesperson for the company declined to comment on that report, citing a mandatory IPO quiet period.
It's part of a growing - but controversial - trend
Until now, the practice has been rare. As Business Insider's Troy Wolverton pointed out last week, Google and Facebook's use of them was a rare exception years ago.
In 2004, when Google went public, for instance, it was one of just three tech companies and 13 firms overall that went public with a dual-class structure, according to data collected by Jay Ritter, a finance professor at the University of Florida. That year, 174 total companies had an IPO.
In the last two years, though, 13 tech firms hit public markets with dual-class structures, including Snap, Roku, Dropbox, and Spotify.
Essentially, the now common practice leaves retail investors with little say in how a company is run.
"The principle of one-share, one-vote is a foundation of good corporate governance and equitable treatment of investors," Kenneth Bertsch, executive director of the Council of Institutional Investors, said in a letter to Lyft's board of directors in February.
"CII believes public companies should provide all shareholders with voting rights proportional to their holdings."
More from Lyft's IPO filing:
- Lyft kicks off 2019 unicorn IPO spree with public S-1
- Lyft warns the push to have ride-hailing drivers classified as employees could seriously harm its business
- Lyft just gave us the first look inside its financials - and its revenue is growing much faster than its losses
- Lyft warns that the future of its business depends heavily on bikes and scooters
- Some Lyft drivers will receive up to $10,000 in cash bonuses so they can buy shares in the company's IPO
- JPMorgan, Credit Suisse and Jefferies among 29 banks running the Lyft IPO
- 'We were told we were crazy' - Lyft's founders describe how far the company has come in a new letter in its IPO filing