Shopify (TSX:SH., NYSE:SHOP) plans to overhaul its governance and share structures so the e-commerce giant can "capitalise on the massive opportunities for continued growth and value creation."
The Canadian group is seeking shareholder approval for a 10-for-1 share split and to issue a "founder share" for chief executive Tobi Lutke that would boost his voting power.
The company would issue a new, non-transferable founder share class to Lutke, giving the executive a total of 40% voting power when combined with his existing Class B shares.
A statement said the overhaul will "modernise Shopify’s governance structure and allow Shopify (TSX:SH., NYSE:SHOP) to remain mission-driven and merchant-obsessed while sustaining an innovative culture."
The plan needs to be approved by a two-thirds voting majority of shareholders.
"The shift to digital commerce has been supercharged over the last two years, permanently changing the landscape of our industry and positioning Shopify at a key inflection point in its growth story," said Robert Ashe, Shopify’s lead independent director in a statement.
"As we look ahead, the board undertook a careful review of Shopify’s governance structure to ensure the company is best positioned to capitalise on the massive opportunities for continued growth and value creation."
Shopify at present has class A shares with one vote apiece and Class B shares with 10 votes each. This gives Class B shareholders a controlling stake with about 51% of voting power.
The proposed 10-for-1 split of Shopify’s Class A and Class B shares is subject to the approval of at least two-thirds of the shareholder votes. If approved, investors will receive nine additional Class A shares or Class B shares for every one share held after the close of business on June 28, 2022.
Shopify shares were up 2.35% at US$617.38 on the NYSE on Monday.