Share pledging is rare, raising concerns about the alignment of executive and shareholder interests and the consequences if the loan goes bad. In the case of Shift4 Payments, the situation is complicated by the company’s multi-class share structure, potentially giving the lender majority voting control in case of a default.
With thousands of companies holding shareholder meetings during proxy season, it’s hard to know where to start. Glass Lewis’ Controversy Alert service can help, identifying the most crucial meetings globally and allowing investors to make better informed voting decisions with the latest information in hand.
In this post, we provide a roundup of the meetings taking place this week that were previously highlighted by Controversy Alerts, and look deeper into the situation at Shift4 Payments. To get alerted ahead of time, get in touch and sign up for Glass Lewis’ Controversy Alert service.
Controversy Alerts June 8 — June 14, 2025
6/12 Aneka Tambang (Controversy Alert issued 5/29)
6/12 PT Bukit Asam Tbk (issued 5/29)
6/13 Kasa Oszczednosci Bank Polski S.A. (issued 5/29)
6/13 Shift4 Payments, Inc. (issued 5/29)
Deep Dive: Shift4 Payments Inc.
Shift4’s insider trading policy provides that no employee, officer, or director may pledge Company securities as collateral to secure loans. However, the policy does not restrict the pledging of shares of the Company’s class B common stock and class C common stock units to secure margin or other loans.
It’s not merely a theoretical distinction – a company owned by the Shift4’s executive chair has pledged, hypothecated or granted security interests in 15 million shares of class B common stock, representing approximately 75.8% of the total shares of class B common stock outstanding as of the record date for the 2025 annual meeting, pursuant to a margin loan agreement.
Share pledging is extremely rare. Across the entire U.S. market, it’s a practice that we observe at only a few companies. That’s because of the potential for share pledging to erode the alignment of executive and shareholder interests -- an executive with significant pledged shares and limited other assets may have an incentive to take steps to avoid a forced sale of shares in the face of a rapid stock price decline, and thus may have an incentive to boost the stock price in the short term in a manner that is unsustainable and not beneficial to long-term shareholders. Moreover, in the case of an actual default, the forced transfer of equity could cause a company's stock price to decline.
In this case, there’s another complicating factor -- the enhanced voting rights attached to class B stock. Although the pledged shares represent less than 20% of the company’s economic value, they hold more than half of the voting rights, potentially giving the lender control of the company.
The situation raises questions about the level of oversight provided by the board, and particularly by its nominating and corporate governance committee. Those questions are themselves further complicated by the fact that committee chair Sarah Goldsmith-Grover is not considered independent by the company due to a consulting relationship, the details of which have not been disclosed.
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