Google likes to experiment. It has plans for a car that drives itself, and goggles that provide a kind of smart phone you can see with. It has one or two other products too, such as YouTube, Google Plus, Android, and a search engine one or two people have heard of.

It has also been making money so fast that the only shareholders who are not envious are the ones with stakes in Apple. In its last quarter, net earnings at Google were up 60 per cent, hitting $2.89bn.

And yet shareholders are not altogether happy.  Sure, they are still buying shares, and they like the way profits are growing. But they fret. What about focus? What’s all this rubbish about goggles and self-driving cars? For that matter, Google Plus is getting a drubbing at the hands of Facebook. For as long as quarter on quarter profits are shooting up  – unlike rockets from North Korea –  they are holding back on the criticisms. But woe betide Google the day its growth stumbles. That will be the day that its super trio of top management – founders Larry Page and Sergey Brin, and chairman Eric Schmidt – are fired, just like Steve Jobs was back in the 1980s.

Except for one thing. When Google was floated, the shares held by its dynamic trio of managers were afforded ten votes for each share, giving the three wise men 65 per cent control of the company’s voting.

Markets were not happy with that, but they could grin and bear it.

But then last week Google revealed plans for a share split. Each shareholder would get an additional spanking new share for every share they already owned. But wait, you may ask, doesn’t that mean Brin, Page and Schmidt’s voting power will be diminished? You can almost hear institutional investors rubbing their hands together. At last they will have the power to enforce a bit more focus at Google.

But no, the Google boys had already thought of that one. The new shares that are being issued won’t carry any voting rights.

The investment community is up in arms. Saneeta Mandil, from the Cass Business School, said: “The decision of Google to split its shares by creating non-voting shares is a clear violation of the one share one vote practice and a dent in the firm’s corporate governance image. This decision appears to be clearly driven by the desire of the founders to strengthen their voting rights and to reduce shareholder activism. A major question raised by this case is how can the founders Larry Page and Sergey Brin can get away with it? The answer is because Google is generating very good returns. In general shareholders raise their concerns only when firms are underperforming. When they do well, anything goes!”

But can Google get away with it? A statement issued by the company went like this: “Given that Larry, Sergey, and Eric control the majority of voting power and support this proposal, we expect it to pass.”

So how can Google justify such a move? “We have put our hearts into Google and hope to do so for many more years to come…We want to ensure that our corporate structure can sustain these efforts and our desire to improve the world.”

It may smack of tyranny of the few over the rights of shareholders. It smacks of a blow against the shareholder democracy. But then again, maybe it is also a blow against the tyranny of quarterly earnings.

Other articles in this series

The mystery of business

Google slams tyranny of quarterly earnings 

Nothing lasts forever 

Tesco’s woe 

© Investment & Business News 2013