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Comment by Animats | Hacker News Reader

There's a president-for-life clause:

"Immediately following the completion of this offering, and assuming no exercise of the underwriters’ over-allotment option, Dylan Field, our Chair of our Board of Directors, Chief Executive Officer, and President will hold or have the ability to control approximately % of the voting power of our outstanding capital stock, including % of the voting power pursuant to the Wallace Proxy. As a result, following this offering, Mr. Field will have the ability to control the outcome of matters submitted to our stockholders for approval, including the election of our directors and the approval of any change of control transaction."

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That generally makes me more inclined to invest as I find that the biggest problem with a lot of public companies is they manage to Wall Street which means putting the short term over the long term, and those are often at odds with each other.

Short term focus is not a control issue it's a fact of life with public ownership. They still need to manage to market expectations or they will be punished, now one person can do whatever it takes to stay focused on only the next 2 quarters.

It’s not really punishment if you don’t care what your share price is. A lower share price doesn’t hurt a company unless perhaps they are trying to do a secondary offering or something.

It does, however, hurt the Wall Street investors. If they have enough power to do so, they will replace the CEO if a share price is too low for too long.

That’s what creates the short term incentive that is a trouble and a lot of public companies. If the CEO has control of the voting shares, that pressure is relieved.

There are a whole lot of companies that are run to benefit their management and not their shareholders. At best, they might be making no money but keeping a bunch of people in work.

There's a good reason public shareholders historically demanded accountability - maybe it's fine for now, but all it takes is some management that you can't kick out, paying themselves extortionate salaries and driving the company into the ground at the same time to recognise the problems with "owning" a company you have no right to actually control (via replacing management and so on)

SEC and most states like delaware where companies incorporate do have minority shareholder protections, regardless of these terms.

A board of directors can screw shareholders even without one controlling director.

The protections for minority shareholder are seperate.

Also the news of malpractice by directors like you mention leads to SEC investigations and stocks come crashing down before they can sell it (as they must declare their stock sales a few days before doing it)

Given cases like Elon moving to less protective jursidictions, those protections are not necessarily as protective as you might prefer, especially if you sign them away at some point in the past.

It's going to be a lot harder to protect your rights, especially around the margins, if you agree to terms like the above.

The alternative is enshittification of the entire product lineup to include ads, exorbitant subscription prices, reduced functionality along a painful price gradient, morphing into a dopamine social product, or a goal to rent real-life assets for to an increasingly impoverished population. Pee in your piss bottle while delivering that Amazon package until we can figure out how to automate your job away too. The shareholders demand it!

It's actually a crime in the US not to manage a public company in the interest of the shareholders. (There was a large case which Ford lost establishing the way this is interpreted now which many people argue is why it gets interpreted in such a shortsighted way so often although personally I'm not sure.)

It makes sense, you're disposing of the capital the shareholders own.

No, it isn't a crime.

Dodge v. Ford Motor Co. was a civil case, not a criminal case. And it was in the Michigan Supreme Court so has no standing in the other 49 states.

And in practice the "business judgement rule" makes it very easy for businesses to do whatever they want as long as they have a vaguely plausible explanation for how it helps the business as a whole. ("We need to buy a private jet for our CEO because he is integral to our growth and success.")

There are certainly downsides to it, but you’ll notice that most of the biggest companies of the last 20 years had a dual class stock structure that gives the founders a high level of control.

The most efficient government is a benevolent dictatorship, the problem, of course is that benevolent dictators don’t live forever and sooner or later you get a non-benevolent one.

These sorts of dual class share structures avoid that issue by generally becoming common stock on transfer so it turns into a democracy with the end of the dictator.

With an IPO you at least got to spend several years seeing how the dictator did.

This is what they call "a W"

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