Shareholder rights have a significant amount of authority despite what some people think, some which include creating a new class of shareholders. Google shareholders have recently exercised this right and created a new class of shareholders at their annual meeting in California.

While the Google shareholders were at the California meeting, they exercised their shareholder rights in a way that will make a significant change to Google's corporate structure. The new class of shareholders was created to establish shares that have separate trading procedures from the other shares and do not have any voting rights. This decision was made after a 2-1 stock split decision.

The current shareholders of Google -- who implemented the decision for the new class of shares -- are primarily comprised of by three individual majority shareholders. The three majority shareholders are two of the founders and the executive chairman. It was reported the decision reflects an effort to guarantee the three primary shareholders retain control of Google. The ability to retain control of the company will allow the three primary shareholders to be the deciding votes in terms of long-range goals for the company.

The new shares are considered Class C shares. Class C shares will allow the company to use Class C shares to create employee compensation packages. Since the Class C shares do not retain any voting power, the creation of the shares will dilute the current shareholder's voting rights. Google's recent creation of Class C shares illustrates how shareholder rights not only provide voting rights that shape the outcome of company, but can also be used to provide financial incentives for employee benefits.

Source: Investors.com, "Google 2-For-1 Stock Split Approved At Annual Meeting," Kevin Shalvey, June 21, 2012