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Multi-Class Stock Structure
A capitalization structure that has different classes of stock with varying voting and dividend rights. Under a typical dual-class-arrangement structure at a private company, the founder(s) and senior executives have 10 votes each per share, while other shareholders have one vote per share. These structures guarantee that certain shareholders, usually the company's founder(s) and senior executives, keep voting control even when the financial ownership of the company is spread more broadly among all public shareholders after the IPO. For additional details, including how these companies structure and use equity compensation differently from companies with a single class of stock, see Equity Practices At Technology Companies With Multi-Class Stock Structures, from the consulting firm Compensia.
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