What Evan Spiegel Says Goes at Snap

Snap's voting structure reflects a trend among tech companies to hold as much power as possible at the executive level.

Evan Spiegel sits in a chair facing Kara Swisher on stage.
Evan Spiegel, Snap CEO, speaks at a company summit. Getty Images Snap, Inc.

Evan Spiegel holds the power at Snap. The company behind Snapchat hosted its annual shareholder meeting today (July 24), and it lasted less than three minutes. Spiegel, the CEO, bears the majority of shareholder voting power, so he controls all voting matters. The structure renders shareholders totally powerless.

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These annual meetings typically allow shareholders to have a say in how a company runs. Investors vote on both company proposals and suggestions from other shareholders. Even if shareholder proposals don’t pass, the meetings allow investors to have their voices heard. Snap had no investor proposals, and it did not take questions from shareholders, saying it didn’t receive any questions in advance. Atul Porwal, who works on Snap’s legal team, was the only speaker at the meeting. He shared that Snap will approve Ernst & Young as the company’s accounting firm and confirm the list of directors, unsurprisingly.

Snap’s voting structure reflects a trend among tech companies to hold as much power as possible at the executive level. Meta (META), Google (GOOGL) and Pinterest all have similar voting structures that elevate the voting power of the founders and executives, though Snap was the first to recognize zero votes for public investors. Mark Zuckerberg, CEO of Meta, controls 61.1 percent of the vote, giving him total power to decide on shareholder proposals. Investors have been asking Meta since 2014 to change its voting structure, but Zuckerberg rejects it every year. Despite his authority over the vote, independent investors and organizations still file proposals most years. This year, they presented proposals that address data transparency, children’s safety and the company’s openness on political activities. Zuckerberg vetoed all of them, electing to handle these issues internally. In the five years Snap has hosted shareholder meetings, no investor has submitted a proposal to be voted on.

Other companies allow for discussions on business strategy during their shareholder meetings. During the Walt Disney Company’s meeting in April, CEO Bob Iger answered investors’ questions on the company’s legal issues with Florida Gov. Ron DeSantis and responded to claims that Disney has a political agenda. For companies like Snap, shareholder meetings appear more like a formality due to their short length and lack of discussions.

Snap sells shares in three classes: Class A, Class B and Class C. Class A stock is available for the public to buy on the New York Stock Exchange, but the shares carry no voting power. Company executives and early investors own Class B stock, and each share receives one vote. Snap’s co-founders Spiegel and Robert Murphy, chief technology officer, exclusively own Class C stock. Its shares come with 10 votes each. Together, they hold 99 percent of the voting power. Spiegel has the majority of power, so he alone can determine the outcome of the vote, Snap said in its stockholder letter.

Snap’s biggest shareholders—despite their lack of voting power—are Fidelity Investments and the Vanguard Group, according to the Nasdaq. Fidelity is a Boston-based financial services company founded in 1946. Pennsylvania’s Vanguard, founded in 1975, is an investment advisor. Both are among the biggest institutional shareholders in the biggest tech companies, including Meta, Google, Microsoft and Amazon.

Snap earnings are on the horizon

Snap will expand on its business strategy during its earnings call with investors tomorrow, after it posts earnings results for the three months ending June 30. Its stock is among the highest price it’s been in the last year, trading today at $12.62 per share. The number is up 56 percent from its recent low in May but down 7 percent from earlier this month.

In recent months, Snap executives have worked to build out the app’s revenue model after facing a downturned advertising market. Earlier this year, Snap launched the ability for users to pay 99 cents to restore streaks, the feature that tracks the number of days users consecutively share photos with each other. It also released a chatbot, at first to subscribers willing to pay $3.99 per month. Snap is also working to improve the format and relevance of ads, according to its earnings statement. Since April, Snap has recruited a series of tech executives from companies like Microsoft and Google.

Analysts expect Snap to report revenue of $1.06 billion, down 4.5 percent year-over-year, according to Seeking Alpha. That number would be an increase from the previous three-month period, when Snap earned $989 million, down 7 percent year-over-year. Still, analysts are cautious. “SNAP has yet to show real evidence of a turnaround, and I suspect that near-term fundamentals may show more pain than upside surprise,” Seeking Alpha analyst Julian Lin wrote in a post.

What Evan Spiegel Says Goes at Snap