U.S. trucker offers Facebook owners ride to future

May 7, 2015

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

The future may be emanating from Silicon Valley but it’s an old-fashioned trucking company offering today’s investors a glimpse of what’s to come. Frustrated by co-founder and Chief Executive Jerry Moyes, Swift Transportation shareholders will be voting at Friday’s annual meeting whether to eliminate a dual-share structure that grants him control. Owners of Facebook and other similarly feudalistic frameworks one day may find themselves similarly frustrated.

Moyes and his family began in 1966 with a single truck. Once expanded to 800, the company went public in 1990 with one class of shares. Moyes resigned as chairman and CEO in 2005 after paying $1.5 million to settle insider-trading allegations, and then took the company private. When Swift returned to the market in 2010, at a discount to the buyout valuation, Moyes tightened his grip with special shares carrying twice the votes.

Though the $3.5 billion company has performed well, with the stock growing nearly twice as fast as the S&P 500 Index since going public again, Moyes has found ways to irritate shareholders. He is bumping up against the company’s cap on shares that can be pledged on margin, and has offered up many millions more as collateral in other personal transactions.

These shares would convert to ordinary ones if seized. The potential dilution understandably spooks other investors, as would Moyes’ earlier agreement with the Securities and Exchange Commission and that the professional hockey team he owned filed for bankruptcy protection in 2009.

More than three-quarters of the lesser-powered shares voted in 2014 to eradicate the fiefdom, and the International Brotherhood of Teamsters has put the matter on the ballot again. Swift is urging against the idea, pointing to dual-class structures at Zynga, Groupon and LinkedIn as “some of the most successful IPOs in recent years.”

Putting aside that two of the three have imploded, the control-ceding example set in the tech and media industries by companies including Google and Twenty-First Century Fox is not one to be emulated. Some young leaders, including even Moyes many years ago, may deserve to operate unrestrained for a while.

Inevitably, however, their choices increasingly tend to be at odds with the greater good. Facebook already is facing a quixotic vote next month to strip founder Mark Zuckerberg of his super-voting regime. Odds are, however, that like Moyes, he’ll just keep on truckin’.

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