Rust Pipe Co. was established in 1994. Four years later the company went public.
ID: 2698468 • Letter: R
Question
Rust Pipe Co. was established in 1994. Four years later the company went public. At that time, Robert Rust, the original owner, decided to establish two classes of stock. The first represents Class A founders’ stock and is entitled to 8 votes per share. The normally traded common stock, designated as Class B, is entitled to 1 vote per share. In late 2010, Mr. Stone, an investor, was considering purchasing shares in Rust Pipe Co. While he knew the existence of founders’ shares were not often present in other companies, he decided to buy the shares anyway because of a new technology Rust Pipe had developed to improve the flow of liquids through pipes.
Rust Pipe Co. was established in 1994. Four years later the company went public. At that time, Robert Rust, the original owner, decided to establish two classes of stock. The first represents Class A founders’ stock and is entitled to 8 votes per share. The normally traded common stock, designated as Class B, is entitled to 1 vote per share. In late 2010, Mr. Stone, an investor, was considering purchasing shares in Rust Pipe Co. While he knew the existence of founders’ shares were not often present in other companies, he decided to buy the shares anyway because of a new technology Rust Pipe had developed to improve the flow of liquids through pipes.
Of the 1,700,000 total shares currently outstanding, the original founder’s family owns 52,325 shares.Explanation / Answer
founders family voes = 52325 * 8 = 418600
class B votes = 1700000 - 418600 = 1281400
founders family votes/classB votes = 418600/1281400 = 32.67%
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