In his speech yesterday: "Perpetual Dual-Class Stock: The Case Against Corporate Royalty," while acknowledging that dual-class share structures may be beneficial early in a company's life cycle, SEC Commissioner Robert Jackson suggested a number of bases - both in principle and empirically - for rejecting perpetual dual-class structures, i.e., those that have no sunset provision and thus allow for insider ("corporate royalty") control long after the investor trust tied to visionary founders, whose longevity is itself limited (by life span, if nothing else), expires.
In addition to arguing that such ownership and voting structures are inconsistent with national foundational ideas that reject (among other things) retaining and inheriting power, Jackson shares the results of a preliminary analysis he and his staff conducted of 157 dual-class IPOs that purports to demonstrate the declining benefit of dual-class structures seven or more years after the IPO (see the bar graph on page 4 of the speech, and the accompanying data methodology appendix and data spreadsheet ).
While Jackson doesn't advocate, and in fact is opposed to, banning all dual-class companies from major stock indexes due to the adverse consequences to retail investors in particular - many of whom would lose access to those investment opportunities entirely, he expresses the hope that the national securities exchanges will disallow perpetual dual-class listings.