NEW YORK (TheStreet) -- Google
(GOOG) is splitting its stock so that it can issue Class C shares, which won't have any voting rights, as opposed to Class A shares, which carry one vote per share, and Class B shares, which get 10 votes per share.
Google has issued Class A shares to pay employees and finance acquisitions. That was diluting the Class B voting rights, which meant the voting rights of Larry Page and Sergey Brin, the company's founders, who have a combined 56% of the voting rights, a percentage that was shrinking fast because of the heavy issuing of new Class A shares.
With the stock split, due to take effect on Wednesday, Google can issue Class C shares without worrying about Class B share voting power dilution. The current shares will be split into one share of its original kind (Class A or Class B) and one Class C share so that each shareholder will have the same number of votes as he did before the split.
The S&P 500 intends to keep both the old and new Google shares in its index, causing the S&P 500 to have 501 components. That has never happened before.
In February, the S&P 500 was considering having Google trade its Class A and Class B shares under the new ticker GOOGL, while using GOOG for the Class C shares and keeping only the GOOG shares in the index. The S&P 500 ended up keeping them all under GOOG and keeping them all in the index.
With Google's lower stock price, I will be excited to jump in and maybe do a little Google trading. Even though $600 is still a high price for a day-trading stock, Google's trader sentiment is always clear and the stock is volatile, which makes me tempted to trade it.
At the time of publication, the author had no position in the stock mentioned.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.