FORTUNE -- You can't blame Google CEO Larry Page for not being consistent. As Google prepared to go public nine years ago, Page detailed in a letter to prospective investors the many ways in which Google would be unconventional. It would focus on users and on long-term results; it would have an unusual management structure; it would abide by a wacky "don't be evil" motto -- or at least, by how Page & Co. interpreted it; and it would aspire to make the world better. Oh, and if shareholders didn't like any of this, there wasn't much they could do about it: Google would have dual stock class structure that ensured that Page and co-founder Sergey Brin, as well as then CEO Eric Schmidt, would retain voting control.
A year ago, Page sought to strengthen and extend the founders' majority control, proposing a stock split that would create a new class of stock with no voting rights. The details were arcane but the effect clear: Page and Brin would continue to call the shots, even though they currently own about 15% of Google's (GOOG) equity.
Not surprisingly, advocates of shareholder rights universally panned the move. After all, the owners of Google's new shares would have few rights beyond their ability to sell their shares. A Massachusetts pension fund sued to block the split, alleging the founders and the board had breached their fiduciary duty to shareholders.
On Sunday night, Google's board approved a proposed settlement of the lawsuit. The particulars of the settlement are complicated, but it essentially calls for Google to compensate the owners of the new class of shares if those shares fall in value below those of Google's other shares. If a court approves the plan, the stock split is likely to go forward.
Page's undemocratic style of governance has hardly been a handicap. A $1,000 investment in the company at the IPO would now be worth about $10,500. Google shares closed above $900 on Tuesday, just shy of their all-time high of $920, giving the company a market value of nearly $300 billion. Since Page announced the controversial stock split last year, shares have risen 38%. Google's shareholders may be disenfranchised, but they are not unhappy.
None of this is to say that Google has been setting a good example. When it decided on a dual-stock structure in 2004, the move was virtually unheard-of in tech. Google made it fashionable, and companies like Groupon (GRPN), Zynga (ZNGA), and Facebook (FB) followed suit, giving their founders and early investors control over their destiny. All are trading well below their offering prices. All have unhappy shareholders who now wish they hadn't placed so much faith in the wisdom of those companies' founders. There's not much they can do now to register their discontent other than, of course, sell their shares.
Google's story demonstrates that shareholder rights and returns do not necessarily go hand in hand. But the struggles of lesser tech companies suggest that Silicon Valley's bet on founder control remains fraught with peril.
It's over for the struggling phone maker, right? Not so, says a vocal contingent of analysts and investors. They think the company's worst days are behind it.
Note: This story has been updated to reflect BBRY price changes on June 19.
By Kevin Kelleher, contributor
FORTUNE -- Has any company in the technology sector seen higher highs and lower lows in the past decade than BlackBerry?
If you remember, BlackBerry (BBRY) -- which earlier this MOREJun 19, 2013 5:00 AM ET
A number of companies and cities are trying to match Google's much-covered Fiber project.
By Verne Kopytoff
FORTUNE -- Google has repeatedly grabbed headlines with its ambitious plan to wire more than a dozen cities with super-fast Internet service. The attention is well deserved. People at home will be able to download entire movies in just a few seconds. Businesses will be able to shave time from online chores, build new MOREJun 18, 2013 11:34 AM ET
The search giants collaborated with the feds after 9/11 on an electronic intelligence program.
By Tory Newmyer, writer
FORTUNE -- Google and Yahoo -- and the other tech giants stung by the recent news of their participation in government surveillance programs -- are in the midst of a public-relations offensive to steady suddenly wobbly reputations.
They're sounding a commiserating note, insisting they're just as confounded and concerned as many Americans by the MOREJun 17, 2013 11:41 AM ET
What's next for the companies involved in the NSA leaks scandal.
By Ryan Bradley, senior editor
FORTUNE -- On Sunday, a 29-year-old Booz Allen Hamilton employee named Edward Snowden stepped forward and (via the Guardian) told the world why he chose to make public top-secret National Security Agency documents. The NSA files, particularly those concerning a program called PRISM, describe how the agency could access data from several of America's largest MOREJun 10, 2013 9:23 AM ET
A Google exec, an Apple exec and the only publisher who stayed loyal to Amazon.
FORTUNE -- We got a peek at the witness list in U.S.A. v. Apple, the e-book antitrust trial scheduled to begin its second of three weeks Monday in a Manhattan federal courthouse.
On deck for today, according to our notes:
Thomas Turvey: The Google (GOOG) director of strategic partnerships whose written testimony was demolished Thursday by Apple's (AAPL) MOREPhilip Elmer-DeWitt - Jun 10, 2013 8:26 AM ET
Apple, Google, Yahoo and Microsoft have denied participating in the controversial government program. When will one of their employees say otherwise?
By Ryan Bradley, senior editor
FORTUNE -- Thursday night, after the Guardian broke news of Verizon's involvement in a massive domestic spying operation by the National Security Agency, the Washington Post and the Guardian both revealed the existence of a program called PRISM -- a means by which the government gained access MOREJun 7, 2013 11:51 AM ET
Judge Cote may be backing away from her preliminary view of the DOJ's antitrust case.
FORTUNE -- A subtle but potentially important shift took place Thursday in the Manhattan federal courthouse where U.S. District Judge Denise Cote just wrapped up the first week of the three-week civil antitrust case known as U.S.A. v. Apple.
One of the central questions in the case is whether Apple (AAPL) executives told the six biggest book MOREPhilip Elmer-DeWitt - Jun 7, 2013 7:41 AM ET
If startup SmartThings has its way, nearly every object in your house could one day be tracked and automated.
FORTUNE -- When Alex Hawkinson and his family arrived at their Colorado home in February 2011 for a ski trip, they were shocked at the sight. Earlier that winter, the pipes had burst, water had flooded the basement, and parts of their home were rotting.
"I couldn't stand that I didn't know that MOREJP Mangalindan, Writer - Jun 7, 2013 7:06 AM ET
Embattled computer manufacturers are making new machines they hope can keep pace with phones and tablets.
FORTUNE -- For PC makers, Charles Darwin's Theory of Evolution holds true now more than ever: adapt to their rapidly-evolving environment or perish.
"The PC industry is like that scene out of Jurassic Park, where the little kid asks the professor, 'What happened to all the dinosaurs?' and he responds, 'We see them everyday: They're MOREJP Mangalindan, Writer - Jun 4, 2013 6:45 AM ET
|Dunkin' Donuts to offer gluten-free donuts, muffins|
|Much faster Wi-Fi coming soon|
|J.D. Power ranks GM tops in quality for first time|
|Dow sinks 200 points after Fed hints at stimulus easing|
|Fed sets road map for end of stimulus|