After 17 years, Palantir is getting closer and closer to its public debut later this month. We’ve been covering different facets of the company’s direct listing process including concerns about its governance and how insiders are accelerating the sale of their shares as the public markets date looms closer.
Now, we have several major updates from the company, courtesy of a third amended filing of the company’s S-1 to the SEC this afternoon.
The first news is that Palantir finally has a chief accountant. Jeffrey Buckley, who was formerly Chief Accounting Officer at gaming giant Zynga, will join the company later this week in an equivalent position to handle the company’s books and ensure that its processes are in order.
Concerns about Palantir’s audit quality have been percolating since the company’s board of directors has only recently put together the governance committee required to manage the company’s records. As we noted a few weeks ago, Palantir has admitted in its recent SEC filings that it won’t have an independent board audit committee until well after it publicly trades.
In amended filing, Palantir admits it won’t have independent board governance for up to a year
When it comes to insiders and their intentions to buy and sell, it’s becoming clear that more and more of them are heading toward the exit. In its filing this afternoon, Founders Fund has increased its targeted number of shares for registration by roughly 8%, or roughy 2 million shares in the company.
As direct listing looms, Palantir insiders are accelerating stock sales
Furthermore, the company has clarified a couple of components of its unique governance.
First, the company’s three founders, Alex Karp, Stephen Cohen, and Peter Thiel, will not be allowed to hedge their stakes in the company given their active employment with Palantir. Buried in a section on the voting rights of the company’s founders, Palantir added a phrase “… however, the Company has implemented a policy that will limit or prohibit hedging by directors, officers and employees of the Company…” That policy has previously existed, but the company’s latest filing makes it clear that the policy applies to the founders as well. If one of the three were to leave though, they theoretically could hedge their position, barring any contract signed upon their departure.
Second, Palantir has a three-class convoluted governance structure that includes a special “Class F” share that will give founders Karp, Cohen, and Thiel almost unilateral voting control over the company in perpetuity. Such an arrangement is unique — most tech companies going public today have two classes of shares, one class that holds one vote per share, and one class that holds ten votes per share. Palantir’s Class F shares have a variable number of votes that always give the three founders 49.999999% voting power in the company.
In its amended filing this afternoon, Palantir clarified that some of Thiel’s shares will be considered “Designated Founders’ Excluded Shares,” which will not be considered Class F shares. That will allow Thiel to vote those shares separately, increasing his overall voting power in Palantir.
Minutia perhaps, but critical to a company that has been in the limelight so much over the past decade and is a constant lightning rod for commentary from the commentariat. The NYSE has approved Palantir’s prospectus, which means further changes to its documents outside of pricing are not likely to be forthcoming. The company is still expected to start trading its direct listing around September 23.
