Salesforce.com just filed a preliminary proxy statement with the U.S. Securities and Exchange Commission that includes a proposal to seek shareholder approval for an increase in the number of authorized shares of the company. If approved, the measure would have the effect of splitting Salesforce shares on a four-for-one basis.
Salesforce shares have been on a tear of late and touched a 52-week high of $175.74 today, closing at $173.86, up more than 47 percent from where they were trading a year ago. The proposal would boost the number of shares from 405 million now to 1.6 billion. It would also push the number of shares owned by CEO Marc Benioff, the company’s largest non-institutional shareholder, to north of 40 million shares from about 10.2 million shares now.
The thinking about the split, Salesforce says in the filing, is to keep the shares affordable for mainstream investors. At $43 and change, a share of Salesforce would be easier to justify buying than it is at $173 and change. It also makes stock options given to new hires a little more attractive, because there’s a perception that there’s a lot more room to grow. Salesforce puts it like so in the filing:
“The trading price of our common stock has risen significantly over the past several years. The Board regularly evaluates the effect of the trading price of our common stock on the liquidity and marketability of our common stock and believes the considerable price appreciation has made our common stock less affordable and, therefore, attractive to fewer investors. The Board believes that this considerable price appreciation, and the associated reduction in number of shares of stock covered by equity awards we issue to newly hired and existing employees, has reduced the perceived attractiveness of our employee equity awards.”
