Google’s 2-for-1 Stock Split: How It Will Work

Google (Nasdaq: GOOG), the No. 1 search engine, announced an unusual stock split Thursday when it published its first-quarter financial results. In effect, it will cut the stock's price from its current $651.01 in half, while doubling the number of shares.

Pending approval of shareholders at its June 21 annual meeting, the Mountain View, Calif.-based company will have three classes of shares, one for the founding shareholders -- CEO Larry Page, 39, and Sergey Brin, 38, as well Chairman and former CEO Eric Schmidt, 56, -- and two others for all other shareholders.

In effect, the common shareholders of current Class A shares will get a new share as a special tax-free dividend. Each will have the same value as a regular Google share, but without a vote. These will be new Class C shares.

Over time, Page and Brin may sell more shares, they said in a published statement Thursday. Page said the two co-founders still plan to sell more shares until 2015. But as their management shares -- Class B -- are sold, their power will be reduced.

Investors have always taken a big bet on Sergey and me, Page said during an investor call, promising to stay at the company.

Other companies have similar kinds of arrangements, especially media companies like Washington Post Co. (NYSE: WPO). Facebook, for example, said in its initial public offering filing, that even after the IPO, founding CEO Mark Zuckerberg will control nearly 60 percent of the shares outright, meaning he will control the company.