Investor group seeks to bar Snap from indexes over voting rights
By Ross Kerber
BOSTON (Reuters) - A group representing large institutional investors has approached index providers S&P Dow Jones Indices and MSCI Inc, looking to bar Snap Inc (SNAP.N: Quote) and any other company that sells investors non-voting shares from their stock benchmarks.
Both index providers have said they are reviewing Snap's inclusion. Were Snap to be added to indexes such as the S&P 500 Index or the MSCI USA Index, managers of stock index portfolios would have to buy its shares, and other investors whose performance is tracked against such indexes would likely follow suit.
Some money managers worry about buying Snap’s Class A shares because they have no voting rights, meaning those shareholders will have no voice on matters like company strategy or executive pay.
"They're tapping public markets but giving public shareholders no say," said Amy Borrus, deputy director of the Council of Institutional Investors, which represents pension funds and other large asset owners, in an interview.
In reaching out to both index providers, she said, "What we would like to see at the least is for the indexes to exclude new no-vote companies."
Meetings with both index providers are scheduled this week, she said.
David Blitzer, managing director of S&P Dow Jones Indices and chair of a committee overseeing its indexes, said they would not add a new stock like Snap for six to 12 months after its IPO in any case, and will use that time to study Snap's structure.
While the index provider does not have a hard requirement about a company's voting structure, the committee needs to think through how much influence investors should have, Blitzer said in an interview on Monday. Continued...