Dual class capital structures remain common in IPOs, but in response to investor pressure, many companies have opted to include a time-based sunset provision in their charter documents that will eventually eliminate the high-vote class of stock.  When the ride sharing company Lyft went public in 2019, it took some heat from the CII for turbo-charging its high vote stock (20 votes per share v. the typical 10) and for failing to include sunset provisions in its charter.  Last month, Lyft and its founders decided to unwind that structure.

That move came in connection with the departure of the company’s two founding shareholders from the board and was effectuated by their decision to convert their high-vote Class B common stock into low-vote Class A common stock. Here’s an excerpt from Lyft’s press release:

Lyft, Inc. (Nasdaq: LYFT) today announced that its co-founders, Logan Green, Chair of the Board, and John Zimmer, Vice Chair of the Board, intend to step down from the Lyft Board of Directors (the “Board”) on August 14, 2025, marking the successful completion of a two-year transition plan. Green and Zimmer will also convert all shares of Lyft Class B common stock to Lyft Class A common stock on August 15, 2025. Following the conversion, all holders of Lyft common stock will hold Class A common stock with equal voting rights, and Green and Zimmer will collectively own approximately 9.69 million shares of Lyft Class A common stock.

According to a recent ValueEdge Advisors blog, Green and Zimmer’s decision to convert their Class B shares reduced their voting power in the company from 30% to under 2%. The Class A common stock’s price popped by over 8% on the day after the announcement and has tacked on another 2.5% since then.

– John Jenkins