The Council of Institutional Investors is “surprised and disappointed” that the Standard & Poor’s-run unit has done an about-face on dual-class stock, says Amy Borrus, its executive director. She criticizes the “opaque” rationale for the index decision on the issue. Allocators have been vocal in their opposition to dual-class arrangements because they have no say in the governance.
The Council of Institutional Investors is “surprised and disappointed” that the Standard & Poor’s-run unit has done an about-face on dual-class stock, says Amy Borrus, its executive director. She criticizes the “opaque” rationale for the index decision on the issue. Allocators have been vocal in their opposition to dual-class arrangements because they have no say in the governance. S&P says it did consult with “market participants” and, since the 2017 ruling, numerous companies, mainly in tech, have gone public with dual-class structures. Since 2017, S&P Dow Jones Indices has barred adding new members with dual-class shares from its indexes, most prominent among them the S&P 500. In April, it reversed itself, saying blocking index membership for multi-class companies “no longer served the index family’s objective.” A dual-class stock structure involves one company offering at least two classes of stock – one class with limited voting power is offered to the public, while company executives and founders receive a class with significantly more voting power.
