Google 2011 Annual Report Download - page 24

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Postscript from David Drummond,
Chief Legal Oɝ cer, Google Inc.
THIS IS NOT THE USUAL YADA YADA… SO PLEASE READ ON.
As Larry and Sergey noted, the stock dividend we announced on April 12 will have
the basic effect of a two-for-one stock split. Each holder of a share of Class A or Class
B common stock will receive one share of the new non-voting Class C capital stock.
So after the dividend, a stockholder who currently owns one Class A share with a
single vote will continue to own that share plus one Class C share without a vote.
The Class A shares will continue to trade under the “GOOG” ticker symbol, while the
Class C shares will trade under a different ticker symbol, so stockholders will be able
to trade these shares, just as they can with Class A shares today. Except for voting rights,
the Class C shares will have the same rights as the existing Class A and Class B shares.
As is typically the case with stock splits, the Class C stock dividend will be tax-free.
One thing to keep in mind is that immediately after the Class C dividend, all
stockholders, including Larry, Sergey and Eric, will retain the same voting interest
they hold prior to the dividend. In addition, Larry, Sergey and Eric have agreed to
subject their shares to a Transfer Restriction Agreement. This agreement will maintain
the same link between their voting and economic interests that exists today, even if
they sell some of their non-voting Class C shares. If the founders or Eric wish to sell
or transfer their non-voting Class C shares, a “stapling” provision in the agreement
requires them to either sell an equal number of Class B shares, or convert an equal
number of Class B shares into Class A shares. No other stockholders will be subject
to these restrictions upon the transfer or sale of their shares. The stapling requirement
will terminate as to the founders when their collective ownership falls below a certain
threshold, and as to Eric when his ownership falls below a certain threshold.
XXII