By Ketki Saxena
Investing.com -- Shopify (TSX:SHOP) shares rose today following the company’s annual shareholder meeting, as shareholders approved the 10-for-1 share split proposed by Shopify in mid-April.
The creation of the new share structure - against the advice of two advisory firms - is being implemented at a turbulent time for the e-commerce stock, as demand for online shopping declines from its pandemic highs, and a rising rate environment threatens growth-stock valuations.
The move is designed to make the company’s class A and class B shares more affordable to the retail investor segment, as the company aims to "broaden and diversify its ownership base." Shopify’s 10-1 share split mirrors Amazon’s 20-1 stock split, implemented for trading yesterday.
Year to date, Shopify shares are down over 70%.
Shareholders also approved the creation of a new “founder share” that gives CEO Tobi Lutke 40% of the company's voting power. The founder share will sunset as and when Lutke leaves the company, or in the case that he or his immediate family should no longer hold 30% of the Class A and B shares.
In its announcement, the board noted that “the proposed updates to our governance structure... will allow Shopify to remain mission-driven and merchant-obsessed, focused on long-term value creation. The updates will also strengthen the foundation for long-term stewardship by Tobi, a proven leader who has delivered significant shareholder value."