LENNAR CORPORATION | Equal Voting Rights for Each Share at LENNAR CORPORATION

Status
Filed
AGM date
Previous AGM date
Proposal number
4
Resolution details
Company ticker
LEN
Lead filer
John Chevedden
Resolution ask
Adopt or amend a policy
ESG theme
  • Governance
ESG sub-theme
  • Shareholder rights
Type of vote
Shareholder proposal
Filer type
Shareholder
Company sector
Consumer Discretionary
Company HQ country
United States
Resolved clause
Shareholders request that the Board of Directors take the steps necessary to eventually enable all of our company’s outstanding stock to have an equal one-vote per share in each voting situation. This would encompass all practicable steps including encouragement and negotiation with current and future shareholders, who have more than one vote per share, to request that they relinquish, for the common good of all shareholders, any preexisting rights, if necessary.
Supporting statement
This proposal topic won 45% support at the 2023 Lennar annual shareholder meeting. This likely represented greater than 60% support from the non-insider Lennar shares.

With one-vote per share Lennar’s current problems might not be so severe:

Selling price of homes down 9% versus the comparable figure a year ago.

Margins declining due to increased use of incentives and rebates.

13% decrease in the number of homes under construction.

Stock price down from $184 in October 2024.

Dual-class stocks tend to create an inferior class of shareholders and hand over power to a select few, who are then allowed to pass the financial risk onto others. With few constraints placed upon them, managers holding super-class stock can spin out of control. Families and senior managers can entrench themselves into the operations of the company, regardless of their abilities and performance. Dual-class structures may allow management to make bad decisions with few consequences.

Hollinger International was a sad example of the negative effects of dual-class shares. Former CEO Conrad Black controlled all of the company’s class-B shares, which gave him 73% of the voting power with only 30% of the equity. He ran the company as if he were the sole owner, exacting huge management fees, consulting payments and personal dividends. Hollinger’s board of directors was filled with Black’s friends who were unlikely to forcefully oppose his authority.

Non-family Hollinger shareholders had almost no power to have any influence in terms of executive pay, acquisitions, board composition or poison pills. Hollinger’s financial and share performance suffered under Black’s control.

The Council of Institutional Investors (CII) recommends a 7-year phase-out of dual class share offerings. The International Corporate Governance Network supports CII’s recommendation to require a time-based sunset clause for dual class shares to revert to a traditional one-share/one-vote structure in no more than 7 years.

Please vote yes:

Equal Voting Rights for Each Share—Proposal 4

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