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Fenwick Corporate Partner: Shake Shack IPO Structure “Unusual”

February 02, 2015

​Fenwick & West corporate partner David Bell spoke with BloombergBusiness about the atypical structure of Shake Shack Inc.'s late-January initial public offering.

Bell said the burger chain's dual-class share structure was an "unusual" one for public companies.

“Roughly 9 percent of the S&P 100" and 7.3 percent of Silicon Valley's biggest public companies issue two classes of stock, he explained.

However, the use of dual-class stock structures, which allow founders or other major long-term holders to retain control of a company through special shares with outsized voting rights, has started to gain traction among the SV 150. Authored by Bell, Fenwick's annual survey of corporate governance practices and trends found that the use of dual-class structures has more than doubled since 2011.

Bell added that Shake Shack's IPO structure is also distinctive in that it enables cumulative voting for Class B shares, making it "uncommon" common stock.