Founder control: who gets the final say, and what it costs to keep it

The number in WeWork's prospectus

On August 14, 2019, WeWork filed the prospectus that was supposed to make it a public company. Buried in it was the number that decided everything: 20. Each of Adam Neumann's special shares would carry 20 votes, enough to give him majority control whatever the other owners thought.

Investors balked. Within weeks the votes per share were cut to 10, Neumann agreed to give back $5.9 million paid for the We trademark, and a new director joined the board. On September 30 the filing was withdrawn.

What followed was a long unwinding. A Delaware settlement in February 2021 unwound Neumann's position on terms far below the $1.7 billion once offered. In November 2023 WeWork filed for bankruptcy, listing liabilities of roughly $10 billion to $50 billion, and when it emerged in 2024 all of the old equity was canceled.

Eight years earlier the Hermès family had made a very different control decision. When LVMH quietly built a stake of about 23%, 52 of the 53 eligible family shareholders pooled their shares into a holding company, H51, so that no single member could sell to a raider. The family said why: "The creation of this holding structure confirms the unity of the family in their commitment to defend the independence of Hermes to preserve its values and culture." LVMH gave its stake away to its own shareholders in 2014.

Both were decisions to keep control. Hermès protected one named thing, the company's independence. WeWork protected one man's judgment from every check that might have questioned it. The rest of this guide is about that difference.

What founder control is

The tools are dull and the stakes are not: shares that carry extra votes, holding companies, buyouts, trusts, and proxy fights, the contests in which an activist asks shareholders to vote in its own candidates for the board. Each answers the same question in a different way, and each has a price, paid in money, in votes or in the checks a company gives up.

Why it is so hard

On paper, control is simply a matter of who owns what. In a real company, three things make it hard to get right.

The ways companies did it

The decisions on record take four shapes. Each is a different answer to who gets the final say, and what it costs to keep it.

What 34 companies did

Here is every decision on record, placed by the year it was made and marked by how it turned out. Hover a mark, or open the table, for the company and the outcome.

Of the 33 decisions that can be judged, 28 were never undone, 3 were walked back and 2 were kept only in part. Control structures are built to last, which is their purpose and their danger.

Some cases on record sit at the edge of the decision: an acquisition, a financing or a lawsuit that shows what an owner with the final say chose to do with it. Berkshire Hathaway buying the rest of GEICO and BNSF, or Epic Games suing Apple, are decisions made possible by concentrated control rather than decisions about it.

The walk-backs

Put the walk-backs side by side and a pattern shows. In almost every one, the people in charge used their power to avoid hearing no. The no arrived anyway, from a court, a regulator, the next vote or the results.

Look at what the winners did differently. Disney beat Peltz and adopted the succession process he had asked for. Procter & Gamble beat him and gave him a seat on its own terms. Both treated the activist's argument and the activist as two separate questions. DuPont and Canadian Pacific answered both questions with a single no. Canadian Pacific ended up with the activist's nominees and the activist's chief executive. DuPont kept its board and lost its chief executive anyway.

The lock-ups that held protected something specific. Hermès locked its independence. LVMH locked ownership and left the top job open. Patagonia locked its mission. WeWork locked everything around one person, which in practice protected nothing in particular.

Winning the vote decides who gets to speak. It does not decide who was right.

How to run this decision

If you are weighing a version of this choice, here is what the record suggests doing, in order.

1. Name the one thing the control exists to protect

   Independence, a mission, a long horizon, a refusal to sell. Write it down as one thing, not as control in general. A structure that defends everything defends nothing in particular, and it will be used to win arguments it was never meant for.

   Seen in: Hermès, 2011 · Patagonia, 2022 · WeWork, 2019
2. Write down what the checks you are removing would have caught

   Before you disable a check, describe the mistake it exists to catch and say where else that mistake will now be caught. If the honest answer is nowhere, that is the trade you are making, and it should be made on purpose.

   Seen in: WeWork, 2019 · Oracle, 1990
3. Separate ownership from leadership, and say which you are keeping

   LVMH locked who owns the group and deliberately left open who will run it. The two get bundled in most control arguments, and they have different costs: ownership can be passed on, while the ability to lead cannot.

   Seen in: LVMH, 2022
4. Judge the activist's argument apart from the activist

   Whether this person should sit on your board and whether this person is right are two questions. Disney said no to the first and yes to much of the second. DuPont said no to both, won the vote, and lost its chief executive within months.

   Seen in: Disney, 2024 · DuPont, 2015 · Procter & Gamble, 2017
5. Price control in money, not only in votes

   Control is bought with debt, with dividends, with buyouts. Dell paid in debt and kept the votes. Southland took 7-Eleven private with debt to keep control, and in October 1990 defaulted on $1.8 billion of it. Aramco promised a fixed dividend to make powerless shares attractive and had to borrow to pay it. Put a number on what control costs the company every year.

   Seen in: Dell, 2013 · 7-Eleven, 1987 · Saudi Aramco, 2019
6. Build the ending into the structure

   A lock-up with an end date, a trigger that converts extra votes, an independent chair, a defined event that returns the final say. Hermès's lock runs to 2031, a date anyone can read. A structure with no ending leaves the ending to someone else.

   Seen in: Hermès, 2011

Warning signs

What it has looked like when this decision was going wrong.

• The structure protects the founder's judgment in general rather than one named thing.WeWork, 2019
• The board's public position and the shareholders' vote are pointing in different directions.Canadian Pacific, 2012
• You won the vote, and the numbers keep missing anyway.DuPont, 2015 · Twitter, 2020
• The famous names around the founder advise, and have no power to overrule.Theranos, 2016
• The activist is being judged by whether you like the activist, not by the argument.DuPont, 2015
• The owners no longer run the company and need cash it cannot easily pay out.Subway, 2024

All 34 cases

Each case is one company at one decision: what was on the table, what it chose, why, and what followed, with every fact sourced.

Questions

What is founder control?

An arrangement that keeps the final say over a company with its founder or founding family, usually through shares that carry extra votes, a family holding company, a trust, or by keeping the company private. It lets the owner take a long view and removes the checks that outside shareholders provide.

What is a dual-class share structure?

A company with two or more kinds of shares that carry different numbers of votes. WeWork's founder was to get 20 votes a share. At Dell, the founder's class carries 10 votes a share and the public class one, which gave Michael Dell about 73% of the votes after the EMC deal.

Do boards that beat activist investors keep their strategy?

Not always. DuPont won every seat in 2015 and moved toward the break-up the activist wanted after its chief executive left. Disney won decisively in 2024 and then put in place the succession process the activist had demanded. Procter & Gamble won and kept its strategy, but gave the activist a seat.

Why do family companies stay private?

To keep owners who might want cash or a sale away from the company. Bloomberg bought out its last large outside investor in 2008, and the Nordstrom family took its company private in 2025. Subway shows the limit: after its founders died, its owners needed cash, and it was sold in 2024.