Debate rages about whether economies such as the US and UK are becoming K-shaped, bifurcating into haves and have-nots. But in the corporate world there's no question: the gap is widening between shareholders with clout and those with none. For an example of the trend look at Anthropic. The AI lab behind the Claude chatbot, which filed for an initial public offering on Monday, is as K-shaped as it gets. Regular shareholders will have almost no power because the company's seven founders wield 50.1 per cent on nearly every topic. A separate trust tasked with guarding humankind's interests elects the majority of the board, but investors have no sway over that either.
Other companies are also leaning into corporate elitism. Facebook owner Meta Platforms wants to issue new voteless shares to fund its lavish spending plans; founder Mark Zuckerberg has the deciding vote despite owning just 13 per cent of the company. Space X is another tech giant that vests supreme power in its founder, Elon Musk, through super-voting shares. Anthropic's IPO adds an extra flourish to the theme. Normally, even a shareholder with few or no votes can, as a last resort, sue the company for acting against their interests. But the Claude maker is a "public benefit corporation" with a special mission — to safely build AI. That gives it a shield to do things shareholders may not like. A recent court case involving student loan company MPower Financing confirmed that shareholders in a PBC do not automatically come first. Taking investors' money but depriving them of power is undemocratic, but is it bad? There's a body of evidence suggesting such companies, notably those led by visionary founders, eventually trade at a discount to similar groups with more conventional structures. In a sign that votes may have at least some financial value, Google owner Alphabet's non-voting "C" shares trade at a tiny discount to its more empowered "A" shares. But there is a counter-case too. Professor Dorothy Lund at Columbia University argues that concentrating power in the hands of "informed" investors could be value-enhancing for everyone — and that companies with a "purpose" may be more stable. Certainly, a large chunk of investors who do have votes neglect to use them, which in practice hands influence to big asset managers including Black Rock and Vanguard, which is no more democratic. Shareholder influence can in any case be less solid than it seems, even at "normal" groups. Many motions presented at shareholder meetings are advisory only, and boards sometimes ignore results they do not like, as happened in the past at Netflix, for example, a company whose founder Reed Hastings is now a director at Anthropic. Recent US regulatory reforms have made it harder for small shareholders to get their issues on the ballot without entering into costly litigation. There is therefore one positive in the rise of the K-shaped company: it leaves no doubt about who really runs things. In the somewhat libertarian spirit of the US market, transparency is what matters, and everything has a price. Anthropic investors know clearly where they stand: at the back of the line.
Source: Financial Times Companies · Summarized by HeadlinesBriefing