FTSE Russell to exclude Snap from stock indexes over voting rights

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(Reuters) – FTSE Russell said on Wednesday it plans to exclude Snap Inc (SNAP.N) from its widely followed stock indexes because Snap, the owner of messaging app Snapchat, has an unusual share structure that denies voting rights to investors.

In a document emailed to Reuters, FTSE Russell said it plans to require constituents of its indexes to have more than 5 percent of the company’s voting rights in the hands of unrestricted shareholders.

FTSE Russell Chief Executive Mark Makepeace told Reuters that the new rule would keep Snap out of its indexes. He said Russell plans to seek further feedback from clients.

Index providers’ treatment of Snap and the company’s lack of voting rights have been a hot topic for technology investors after the company disclosed its unprecedented corporate structure ahead of its $3.4 billion initial public offering in March.

Big investment firms including BlackRock Inc (BLK.N) and State Street Corp (STT.N) recently have stressed their attention to shareholder rights and governance issues. That could put major investors on a collision course with Silicon Valley companies keen on keeping decision-making power in the hands of founders and other insiders.

Inclusion in a stock index has been an important milestone for young companies, making their shares eligible to be held by index funds or by active managers who closely follow indexes like the S&P 500, a guidepost for trillions of dollars of capital worldwide.

Shares of Snap were unchanged in extended trade, after closing down 3.53 percent at $13.40, a new low, on the New York Stock Exchange.