when multiple share classes of stock are issued typically one class is offered to the general public while the other is offered to company founders executives and family the class offered to the general public often has limited or no voting rights while the class available to founders and executives has more voting power and often provides for majority control of the company 
understanding a dual class stockdual class stock is designed to give specific shareholders voting control classes of stock with unequal voting shares may be created to satisfy owners who don t want to give up control but do want the public equity market to provide financing in most cases these so called super voting shares are not publicly traded and company founders and their families are most commonly the controlling groups in dual class companies although there is no standard nomenclature for multiple share classes class a shares are normally superior to class b shares in other cases though the reverse is true that s why investors should research the details of a company s share classes if they are considering investing in a firm with more than one class of shares well known companies such as ford and warren buffett s berkshire hathaway have dual class stock structures which provide founders executives and families the ability to control majority voting power with a relatively small percentage of total equity the dual class structure at ford for instance gives the ford family control of 40 of the voting power while owning a small percentage of the company s total equity 1 an extreme example is echostar communications ceo charlie ergen who controls around 91 8 of the vote with his powerful class a shares 2dual class structures allow companies to access public capital without sacrificing control special considerationswhile they ve recently become popular dual class structures have been around for some time in various forms the new york stock exchange nyse banned dual class structures in 1940 after an outcry in 1926 over automotive company dodge brothers public offering which consisted of non voting shares for the public however the exchange reinstated the practice during the 1980s in the wake of competition from other exchanges 3 once shares are listed companies cannot reverse any voting rights attributed to the new class or issue any classes of shares with superior voting rights the approximate percentage of u s companies in the russell 3000 index with a dual or multiple class structure according to a harvard law school study 4in recent times the number of companies opting for a dual class structure during listing has multiplied this is particularly the case among technology startups many of which use this strategy to retain control over their outfits alphabet inc s google is the most famous example of this trend see below alphabet inc s google is the most famous example of this trend many investors were frustrated at google s initial public offering ipo when the internet giant boasting a market capitalization among the top 30 firms worldwide issued second class b shares to founders with 10 times the amount of votes as the ordinary class a shares sold to the public 5several stock indexes have stopped including companies with dual class structures the s p 500 and ftse russell are two such indexes 67dual class stock controversydual class stock structures are controversial their supporters argue that the structure enables founders to demonstrate strong leadership and the placing of long term interests over near term financial results it also helps founders retain control over the company as potential takeovers can be avoided through their supermajority voting shares on the other hand opponents argue that the structure allows a small group of privileged shareholders to maintain control while other shareholders with less voting power provide the majority of the capital in effect there is an unequal distribution of risk the founder is able to access capital from public markets at minimal economic risk shareholders carry a major part of the risk related to strategy academic research has proved that powerful classes of shares for insiders can actually hinder long term outperformance a middle path has been suggested by another group of shareholders according to them the effects of a dual class structure can be limited by placing a time bound restriction on such structures and allowing shareholders to accumulate voting interest over time examples of dual class structuresalphabet subsidiary google is the most famous example of a company with a dual class structure when it was listed in 2004 the search giant unveiled two classes of shares in its offering class a shares were reserved for regular investors and had one vote per share class b shares were reserved for founders and executives and had 10 times as many votes as those for the ordinary a shares 5many investors were frustrated at this initial public offering ipo given that the internet giant boasted a market capitalization among the top 30 firms worldwide 5 later the company added a third class of shares these class c shares came with zero voting rights other examples of companies with dual class structures are meta formerly facebook zynga groupon and alibaba 