Shopify shares were rising Monday after the e-commerce platform announced it was planning a 10-for-1 split of common stock.
SHOP) joins a growing list of companies seeking shareholder approval for a stock split in recent weeks, including
The proposed share split “will make ownership more accessible to all investors,” Shopify said in a press release on Monday. The plan is subject to the approval of at least two-third of shareholders at the company’s shareholders meeting on June 7.
Shopify also is proposing to convert all Class B shares into Class A shares when Class B shares are diluted below a specific threshold. The move would strengthen the foundation for “long-term stewardship” by CEO Tobi Lütke, the company said.
“A special committee of independent directors carefully and thoroughly reviewed this proposal and determined that taken together, these changes will enhance Shopify’s strategic flexibility and ability to pursue value-enhancing organic and external opportunities,” said Robert Ashe, Shopify’s lead independent director. “Tobi is key to supporting and executing Shopify’s strategic vision and this proposal ensures his interests are aligned with long-term shareholder value creation.”
Under terms of the proposal, the company will authorize and issue a new class of shares, the Founder share, to Lütke, and provide him with a variable number of notes that when combined with his Class B shares will represent 40% of the total voting power. The Founder share will sunset if Lütke no longer serves the company as an executive officer or board member or he sells off his shares.
Shopify stock was up 1.3% to $611 in premarket trading on Monday. The stock has lost 56% this year.
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