Class A vs. Class B Shares: Voting Rights and Price Differences

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Class A vs. Class B shares is a question about voting power, not ownership. Both are usually common stock with the same claim on profits, dividends and company value per unit of economic interest. The difference is the number of votes each share carries, and sometimes how much one share is worth relative to the other. The letters have no fixed meaning. At some companies Class A holds the extra votes. At others Class B does. Only the company’s charter and its filings tell you which class controls the vote and what one share of each class is worth.

What the letters mean

A company can create as many classes of common stock as its charter allows. When it has two, they are traditionally labeled Class A and Class B. Companies do this for a few reasons:

• Concentrating control. Founders or executives keep a high-vote class while selling a lower-vote class to the public. This lets them raise capital without giving up control, and it can help them resist a hostile takeover.
• Making the stock affordable. A company whose shares trade at a very high price can issue a cheaper class so small investors can buy in.
• Corporate history. A separate class may come from a merger, an acquisition or a division that had its own shareholders.

One class may trade on an exchange while the other does not. Unlisted classes are typically held by founders or insiders and come with restrictions on sale. In many dual-class structures, a high-vote share converts into the ordinary listed class when it is sold, so the extra votes stay with the original holders.

How much control each class gives you

Ordinary common shareholders usually get at least one vote per share. They use those votes at annual meetings to elect the board and approve major decisions such as mergers or charter amendments. In a multi-class company the ratio changes, and the structure determines how much a public shareholder can influence.

Here is how the math works, using hypothetical numbers. Suppose a company has 100 million publicly traded shares with one vote each and 20 million founder shares with 10 votes each. The founders own about 17% of the shares (20 of 120 million) but cast 200 million of 300 million votes, or about 67%. Public holders own most of the economic value and still cannot outvote the founders on any item that needs a simple majority.

For a typical individual holding, this rarely changes day-to-day returns. It matters when shareholders disagree with management and want to replace the board or block a deal, because in a dual-class company they may not have the votes to force a change.

Why the prices differ

If two classes carry the same economic interest per share, their market prices usually stay close. That is the case at many dual-class companies, where the ratio is one to one and only voting rights differ. The voting class may trade at a small premium or discount depending on demand for control and how actively each class trades. Large, stable price gaps almost always mean one share of one class represents more of the company than one share of the other.

The relationship can be written as:

Price of high-value class ≈ conversion or economic ratio × price of low-value class

That approximation assumes equal rights per unit of economic interest. It breaks down when a conversion right runs in only one direction or when one class trades thinly.

Example: Berkshire Hathaway

Berkshire Hathaway is the standard real-world case. For years Warren Buffett refused to split the stock, and the price climbed far beyond what most individuals could pay for a single share. He also preferred to keep voting power with a relatively small group of holders. In 1996 the company created Class B shares to give small investors a direct, low-cost way in.

Today each Class B share (BRK.B) carries 1/1,500 of the economic interest of a Class A share (BRK.A). Its voting power is lower still: 1/10,000 of a Class A vote. A Class A share can be converted into 1,500 Class B shares, but Class B cannot be converted back into Class A. Because of that conversion right, BRK.A tends to trade near 1,500 times the BRK.B price. Someone buying BRK.B gets the same per-dollar claim on Berkshire’s earnings as a Class A holder, with less voting weight per dollar invested.

Exceptions that change the answer

The high-vote class may be labeled B. At Berkshire, Class A is the senior voting class. At Alphabet and Meta, Class B is the founders’ high-vote class (10 votes per share), and the publicly traded class has one vote or none. Alphabet’s GOOGL is Class A with one vote and GOOG is Class C with no vote. The GOOG vs. GOOGL comparison walks through that structure.

One class may have no vote at all. Brown-Forman’s BF.A shares vote and its BF.B shares generally do not. Some companies, particularly in Canada, label the low-vote class “subordinate voting shares,” which names the relationship directly.

Conversion terms can vary. Some high-vote shares convert into more than one ordinary share. As a hypothetical, an executive holding 10,000 shares that each convert into 2.5 common shares would effectively share in the value of 25,000 common shares if the company were sold.

Mutual fund share classes are a different system. In a mutual fund, the letters describe how you pay sales charges, not voting rights. Class A usually charges a front-end load, Class B a back-end load that declines the longer you hold, and Class C an ongoing fee.

Which class should an individual investor buy?

For most individual investors, the decision comes down to a few practical checks rather than a preference for A or B:

1. Economic interest per share. If the classes differ, as at Berkshire, compare them on a per-unit basis rather than by share price.
2. Votes per share. Read the proxy statement or annual report to see whether your class votes and how much.
3. Trading activity and access. If one class trades more actively, its bid-ask spreads may be tighter. A cheaper class can also be easier to fit into a small account.
4. Governance preference. Some investors avoid companies where founders hold permanent control. Others accept it if they trust management.

If the economic rights are equal and you have no interest in voting, the lower-priced or more actively traded class is usually the practical choice. If you want a say in governance, only the voting class gives it to you. Even then, a retail position rarely moves an outcome when insiders hold a high-vote class.

FAQs

The Bottom Line

Dual-class structures matter most to investors who want a voice in board elections or major deals, since insiders with high-vote shares can outvote public holders. Check the charter, proxy statement or annual report to learn each class's votes and economic interest per share. When economic rights are equal and voting is not a priority, the lower-priced or more actively traded class is usually the practical pick.