The online search leader reported a 61 percent increase in its net income for the first three months of the year and announced plans to issue a new class of stock to shareholders. The new shares won't have any voting power and will help Google's senior leaders keep control years from now. Under the plan, expected to win approval in June, all current stockholders would get one share of the new Class C stock for each share they now own. This effectively splits Google's stock price in half. Employees given Google stock in the future would get the non-voting stock, allowing voting power to remain with existing shareholders. The same would hold true for companies that Google buys using its stock. Stock splits reduce prices for each share, allowing smaller investors to participate. Although Google said investors had been clamoring for one, the decision announced Thursday seemed driven more by a desire to retain control. Without change, senior leaders would eventually lose their voting power. CEO Larry Page and fellow co-founder Sergey Brin said that would undermine "our aspirations for Google over the very long term." Since it went public in 2004, Google's founders have emphasized a need to insulate management from short-term pressures. That's a view now commonly held by the newest generation of freshly public - or soon-to-be public - tech companies such as Zynga Inc. and Facebook Inc.
Even so, issuing shares with no voting power is unusual. But that's been Google's way since its beginning, even as it turned into a multi-national corporation. The company held a "Dutch auction" for its initial public offering of stock, allocating new shares to the highest bidders, including small investors. Traditional IPOs favor large investment banks. Google's founders argue that Google will be more successful if the company concentrates on its long-term vision. This can mean short-term stumbles over earnings and revenue, as well as investments that may not bear fruition for years. "These kinds of investments are not for the faint-hearted," the founders said in a letter posted online. In other words, they don't want investors voting with short-term interests in mind.