Google Given Poor Marks For Corporate Governance

by Glen Shapiro, LawAndTax-News.com, New York

26 August 2004

Institutional Shareholder Services, which provides advice and corporate governance information to institutional investors such as pension fund and mutual fund managers has awarded newly public internet search portal, Google poor marks with regard to its corporate governance structure.

Google reportedly earned its place at the bottom of ISS's Corporate Governance Quotient study as a result of issues such as its two tier stock issue and voting rights system, which sees class A shareholders receiving one vote per share, whilst class B investors (predominantly insiders) receive ten votes per share.

"For now, shareholders must put all of their trust in an unproven senior management team and a board dominated by early-stage financial backers, who may have short-term interests that don't match those of other shareholders," ISS announced in a statement, continuing:

"The company's super voting rights structure gives insiders 10 votes per share compared to one vote per share for participants in the IPO. The last minute decision to scale back the number of existing pre-IPO holders' shares to be sold in the offering guaranteed that insiders will have 'carte blanche' authority in running the company over the near term."

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