What it is:
How it works (Example):
For example, let’s say Joe purchases stock in Company XYZ. If Joe buys A-shares, a single A-share may give him six votes instead of one. It will also place him at the front of the line when dividends are issued. However, if Joe were to buy B-shares, he may receive only one or two votes per share, and would be at a lower priority for dividend payments.
Why it Matters:
While A-shares offer shareholders more benefits, if the company issuing the stock is well-managed, retail investors needn't be concerned about the different classes of stock. In most cases, different shares are issued to give the company managers, insiders and directors a greater degree of power over the company -- and to provide a better defense against events like hostile takeover attempts. It should also be noted also that differences in share class do not affect the average investor’s share of the profits or benefits from the overall success of the company.