Why GoPro CEO Nick Woodman Cannot Be Fired

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As GoPro Inc. (NASDAQ: GPRO) slips ever further toward oblivion, burdened by a broken business model, a logical first step would be to remove CEO Nicholas Woodman, who is also the founder. Unfortunately, no matter how much damage he does to the company, he controls the board by owning 99.08% of the Class B stock, which represent almost all the voting shares.

GoPro slashed its fourth-quarter estimate to $340 million. Consensus analyst estimates for the quarter ranged between $470 million and $475 million. The company also will fire over 200 people as it cuts its headcount to just below 1,000. A major reason for the cuts is that GoPro will exit the drone business.

As GoPro disclosed the plans, Woodman said:

GoPro is committed to turning our business around in 2018. We entered the new year with strong sell-through and are excited with our hardware and software roadmap. We expect that going forward, our roadmap coupled with a lower operating expense model will enable GoPro to return to profitability and growth in the second half of 2018.

Wall Street did not believe him. GoPro shares fell 25% Monday morning to $5.04, a new 52-week low. The 52-week high is $11.89.

Woodman owns 36,576,628 Class B shares and no Class A shares. Because of the voting power attached to the Class B shares, his total share of voting power is 76.81%.

As the proxy notes:

Percentage of total voting power represents voting power with respect to all shares of our Class A common stock and Class B common stock, as a single class. The holders of our Class B common stock are entitled to ten votes per share, and holders of our Class A common stock are entitled to one vote per share.

Investors were warned about Woodman’s control in the 10-K:

 Our Class B common stock has 10 votes per share, and our Class A common stock has one vote per share. Stockholders who hold shares of Class B common stock hold approximately 78% of the voting power of our outstanding capital stock as of December 31, 2016 with Mr. Woodman, our Chairman and CEO, holding approximately 77% of the outstanding voting power. Mr. Woodman is able to control all matters submitted to our stockholders, including the election of directors, amendments of our organizational documents and any merger, consolidation, sale of all or substantially all of our assets or other major corporate transaction. This concentrated control could delay, defer, or prevent a change of control, merger, consolidation, or sale of all or substantially all of our assets that our other stockholders support, or conversely this concentrated control could result in the consummation of such a transaction that our other stockholders do not support. This concentrated control could also discourage a potential investor from acquiring our Class A common stock due to the limited voting power of such stock relative to the Class B common stock and might harm the trading price of our Class A common stock.

Investors who are unhappy have no options.