Research from Columbia Business School outlines how the adoption of tenure voting would affect control rights within a corporation over time NEW YORK – As Lyft prepares for its initial public offering (IPO), the ride-sharing startup is also gearing up for a debate over investor rights. Following in the footsteps of tech giants Alphabet and Facebook, Lyft’s co-founders are seeking a similar, dual-class ownership structure. But according to new research from Wei Jiang, Arthur F. Burns Professor of Free and Competitive Enterprise at Columbia Business School, tenure voting offers a way for founders to maximize shareholder value, satisfy shareholders who want more voting power, and maintain control of the company in the long run. In the paper, “Will Tenure Voting Give Corporate Managers Lifetime Tenure?,” Jiang and co-authors Paul Edelman and Randall Thomas of Vanderbilt University posit that tenure voting, which gives all investors equal access to voting power as long as they are willing to hold shares for the long-term, helps promote greater balance between managerial and shareholder rights. The researchers generated a database documenting portfolio turnover rates by different categories of institutional investors. They used this data to inform a mathematical voting model of tenure voting to show how its adoption would affect control rights within a corporation over time. Jiang and her co-authors found that corporate managers who retain at least 20-30 percent of the total number of company shares on a long-term basis will maintain control of the company—even in the face of a proxy battle. But if managers choose to sell their initial block of company stock over time and the majority of long-term ownership is held by institutional shareholders, their position is weakened in a proxy battle and institutions like the Institutional Shareholder Service (ISS) wield the real power. The paper concludes that tenure voting represents a middle ground for corporate managers and investors, representing progress in terms of balancing the power dynamic of corporate ownership. For more information, read the paper’s research brief produced by Columbia Business School’s Jerome A. Chazen Institute for Global Business. ###