Google founders Sergey Brin and Larry Page, who started the iconic internet company in their garage in 1998, had bigger plans for Google than just ads and search. The company is branching out into innovations that may change the way we do everything. It is shelling out large amounts to create balloons that provide wireless internet connection in remote areas and to develop contact lenses that deliver medicine.
Shareholders have been concerned that Google’s sexy research and development projects are causing the company to spend like a drunken sailor. Anticipating shareholders’ complaints and wanting to maintain their control over the company, Brin and Page split the shares into a C class that would have no voting rights. B shares have 10 votes for each A share. More A shares were issued to pay for projects, according to the Seattle Times, and the voteless C shares were created.
This move was met with complaints, and the Google founders attempted to smooth it over by promising compensation for C shareholders if C shares fell more than one percent between A shares in the first year of trading. To the chagrin of Brin and Page, C shares fell between 1 and 2 percent in the past year, which means they will have to shell out $500 million for C shareholders. While this means that they can maintain their control to fund their pet projects, and have enough cash on the books to cover it, are Brin and Page just paying a fair price to allow them to engage in world-changing innovations, or are they playing a losing game?