LinkedIn 2014 Annual Report Download - page 43

common stock, representing approximately 54.3% of the voting power of our outstanding capital stock
as of December 31, 2014. Mr. Hoffman has significant influence over the management and affairs of
the company and over all matters requiring stockholder approval, including election of directors and
significant corporate transactions, such as a merger or other sale of our company or its assets.
Mr. Hoffman will continue to have significant influence over these matters for the foreseeable future.
In addition, the holders of our Class B common stock collectively will continue to be able to control
all matters submitted to our stockholders for approval even though their stock holdings represent less
than 50% of the outstanding shares of our common stock. Because of the 10-to-1 voting ratio between
our Class B and Class A common stock, the holders of our Class B common stock collectively will
continue to control a majority of the combined voting power of our common stock even when the
shares of Class B common stock represent as little as 10% of the combined voting power of all
outstanding shares of our Class A and Class B common stock. This concentrated control will limit the
ability of our Class A stockholders to influence corporate matters for the foreseeable future, and, as a
result, the market price of our Class A common stock could be adversely affected.
Future transfers by holders of our Class B common stock will generally result in those shares
converting to Class A common stock, which will have the effect, over time, of increasing the relative
voting power of those holders of Class B common stock who retain their shares in the long term. If, for
example, Mr. Hoffman retains a significant portion of his holdings of Class B common stock for an
extended period of time, he could, in the future, continue to control a majority of the combined voting
power of our Class A and Class B common stock. As a board member, Mr. Hoffman owes a fiduciary
duty to our stockholders and must act in good faith in a manner he reasonably believes to be in the
best interests of our stockholders. As a stockholder, even a controlling stockholder, Mr. Hoffman is
entitled to vote his shares in his own interests, which may not always be in the interests of our
stockholders generally.
Our stock price has been volatile in the past and may be subject to volatility in the future.
The trading price of our Class A common stock has been volatile historically, and could be subject
to wide fluctuations in response to various factors, some of which are beyond our control. During 2014,
the closing price of our Class A common stock ranged from $142.33 to $238.43. Fluctuations in the
valuation of companies perceived by investors to be comparable to us or in valuation metrics, such as
our price to earnings ratio, could impact our stock price. Additionally, the stock markets have at times
experienced extreme price and volume fluctuations that have affected and might in the future affect the
market prices of equity securities of many companies. These fluctuations have, in some cases, been
unrelated or disproportionate to the operating performance of these companies. Further, the trading
prices of publicly traded shares of companies in our industry have been particularly volatile and may be
very volatile in the future. These broad market and industry fluctuations, as well as general economic,
political and market conditions such as recessions, interest rate changes, international currency
fluctuations or political unrest, may negatively impact the market price of our Class A common stock.
Volatility in our stock price also impacts the value of our equity compensation, which affects our ability
to recruit and retain employees. In addition, some companies that have experienced volatility in the
market price of their stock have been subject to securities class action litigation. We may be the target
of this type of litigation in the future. Securities litigation against us could result in substantial costs and
divert our management’s attention from other business concerns, which could harm our business.
There may be a limited market for investors in our industry.
There are few publicly traded companies in the social and professional networking and related
industries at this time, and we were among the first social networking companies to go public. Investors
may have limited funds to invest in the social and professional networking sector, and as publicly
traded securities in these industries become more available, investors who have purchased or may in
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