Google is now facing a lawsuit filed by a pension fund after the Internet behemoth offered up a stock split proposal.
Last month, Google reported sound financial figures over its previous quarters and proposed a stock split to beef up stocks owned by co-founders Larry Page (CEO) and Sergey Brin.
However, according to Reuters, the Brockton Retirement Board, a pension fund based in Massachusetts, claims that the Google stock split proposal only plays up Page and Brin, does not consider its shareholders’ best interests, will only create a new non-voting “Class C” stock. The complaint filed with the Court of Chancery in Delaware believes that Google’s co-founders will attempt to make new shares without thinning out their prevailing 56.3 percent voting share in the company.
The complaint lays claim that Brin and Page “wish to retain this power, while selling off large amounts of their stockholdings, and reaping billions of dollars in proceeds” and that the suggested stock split will provide billions in equity to the co-founders for absolutely nothing.
The Google stock split proposal has received support from its board members and considered as a method to provide sufficient funds in the company’s legal struggles over its Android mobile operating system.
“We believe that it will provide great competitive strength – insulating Google from short-term pressures, whatever the source, for a long time to come, while also giving us more flexibility around equity grants,” wrote Page during the announcement.
The Brockton pension fund has called for the federal court to stop the Google stock split and grant undisclosed damages.