How is it wrong for a founder to take a smaller cut of the profit in exchange for more power?
Founders (individuals) want a voice in their companies, and how much money does one need anyway? Investors (usually institutions) want to make money, and they need lots of it.
Seems like a fair trade.
Does an investment with those properties sound like a good investment to you?
> Does an investment with those properties sound like a good investment to you?
It's plainly obvious you don't hold an investment in a public company that does that. Your setup has a self-correcting action: the investors sell if they can't derive the expected benefit from owning the stock because the CEO is sending all the profit into their own bank account.
Why doesn't Zuckerberg do it for example? Because the stock would implode by 90%+ overnight and the best employees would immediately flee as they see their stock become worthless and future stock compensation goes to zero. Then the rest of the corporation would collapse in time without the employees required to keep it operating at a high level. Even monopolies can easily lose their position. Just downgrading your average employee by one grade, eg from a B to a C, will collapse elite tech companies over time. History is littered with examples (from HP to IBM) of what happens to companies when they can no longer attract the best.
I’m not saying I agree with nepotism in public companies, just saying there’s precedent.
I own shares in two dual-class companies:
Berkshire is one, and there, the dual class nature has the effect of giving more-serious/rich investors more votes. The coming century will test whether that is a good idea.
Starrett is the other; there the dual class structure is designed to protect a once-family business that is still run by the family. To me, at present, it is a feature, not a bug. Without the dual-class, Starrett probably would have been bought out in a hostile takeover/leveraged buyout. Instead, the company endures, with a long-term vision. The coming decades will test my optimistic thesis.
Recently, in Switzerland, there was a company (Sika AG), where the founding family held 54% of the vote with 16% of the shares. When they wanted to cash out, they simply sold their shares to an outside investor at a sizable premium, and the remaining shares could potentially have ended up worthless (ultimately, after a multi year lawsuit, a compromise prevailed).
Shouldn't building a business be step one, though? Neuman didn't do that; he gambled a bunch of VC money on real estate.