Silicon Valley Vs. Wall Street: Can the New Long-Term Stock Exchange Disrupt Capitalism?

Tech luminaries back new exchange that rewards shares with more voting power the longer investors own them

..  the voting power of shares increases the longer investors own them. Firms listed on the exchange would need to use such a structure, often called “tenure voting,” while abiding by numerous other rules, such as a ban on tying executive pay to the company’s short-term financial performance.
.. skeptics wonder whether the LTSE is just another way for tech founders and elite Silicon Valley investors to maintain control at the expense of other shareholders. One leading New York hedge-fund manager who asked not to be named called tenure voting “disgusting” and said it would enable managers to duck accountability.
.. The LTSE is funded by a range of venture-capital firms, led by Peter Thiel’s Founders Fund, Andreessen Horowitz, SV Angel and Greylock Partners, and individual investors including former Twitter Inc. CEO Dick Costolo, AOL co-founder Steve Case and Groupon Inc. founder Andrew Mason. The firm says it has raised $19 million from around 70 investors in all.
.. SEC Chairman Jay Clayton .. has voiced concerns about the nearly 50% drop in the number of U.S. public companies over the past two decades—a trend that is partly due to companies choosing to stay private for longer.
.. executives’ bonuses couldn’t be tied to financial-performance targets over periods of less than one year. If the executives are paid in company stock, the shares couldn’t fully vest for at least five years.
.. they would be barred from releasing quarterly earnings guidance
.. the voting power of his or her shares would grow over time, capped at 10 times the power of ordinary common stock after a decade.
.. The voting structure will depress the share price of any company listed on the LTSE, said Neal Wolkoff, former CEO of the American Stock Exchange. “Fewer people will want to buy into a company where there’s entrenched management,” he said.
..  In his view, tenure voting is better than the solution favored by some Silicon Valley firms: severely limiting the voting power of ordinary shareholders through two or more share classes.

Snap Inc., for instance, has a controversial multiple-class share structure in which shareholders who buy the company’s common stock listed on the New York Stock Exchange don’t get voting rights at all.