How America’s Richest People Can Access Billions Without Selling Their Stock:
of richest Americans have pledged public stock of companies listed on the NYSE or Nasdaq exchanges.what company founders want, in this case to pledge shares, is at odds with what board members and shareholders want, which is to disallow pledging.
While Oracle does not disclose how much Ellison has borrowed against his shares, his penchant for borrowing was revealed in unsealed court documents from a shareholder lawsuit. Those documents, firstin 2006, showed that Ellison had outstanding loans of more than $1.2 billion in 2001, and that his financial adviser had warned him, “We have a freight train going down a track hitting a debt wall.”
Kinder, whose $7.2 billion fortune makes him the 128th wealthiest American, has pledged 40 million shares of his eponymous company — 15.6% of his overall stake, worth $679 million — for the sole purpose of buying more company stock, as described in the company’s proxy statement. To date, Kinder has purchased 10 million additional shares of Kinder Morgan, financed with debt taken out against his pledged Kinder Morgan shares.
ISS countered this argument in its recent proxy analysis of Tesla’s corporate governance principles. “If an executive who already owns 15 or 20 percent of a company's outstanding shares...is not already motivated to act in the interests of shareholders, there is no credible argument that increasing that stake to 25 or 30 percent will suffice to accomplish that goal,” says the report.
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