FAQ for Retail Investors

Why is supporting this proposal good for shareholders?

• The progress we have made advancing our vision for the future of commerce would not have been possible without our founder and CEO, Tobias Lütke.
• Mr. Lütke established a company whose mission is clear – to make commerce better for everyone – and activated an entire ecosystem to support entrepreneurship in an age where power increasingly gravitates to the largest enterprises.
• As the founder, Mr. Lütke is equipped with the combination of technical knowledge, strategic vision, industry expertise and thoughtful leadership to continue to develop and motivate the high-performing and innovative organization Shopify has grown into today.
• As we look to the future and pursue our vision for a 100-year company, Mr. Lütke will play an integral role in the continued support and execution of Shopify’s long-term strategy.
• If the proposal is approved, the total voting power of all Class A shareholders will increase from approximately 49% to approximately 59%.

How does this proposal benefit shareholders?

• The proposal benefits shareholders by modernizing Shopify’s governance structure and aligning it with our long-term market opportunities, ensuring that Shopify remains mission-driven and merchant-obsessed, focused on long-term value creation.
• Additionally, Mr. Lütke will agree to certain changes with respect to his Class B shares which will provide rights and protections for shareholders, including:
  • requiring Mr. Lütke to maintain a minimum equity ownership in order to maintain his Founder share and Class B shares, further aligning his interests with Shopify’s other shareholders; and
  • removing Mr. Lütke’s ability to transfer voting power associated with his Class B shares, thereby preventing intergenerational transfers of such voting power.
• The Board and Special Committee believe the proposal is in the best interest of the Company and its minority shareholders and the Board unanimously recommends that shareholders vote in favor of it.

What if the proposal does not pass?

• In the event the proposal does not pass, the current governance structure will remain in place, which allows for the following:
  • If Mr. Lütke left Shopify, he would still maintain his high-vote position.
  • Mr. Lütke would maintain the ability to transfer the voting power associated with the Class B shares to his spouse or children.

Who initiated this process?

• This has been something the Board and Shopify have periodically examined.
• In order to facilitate the next stage in Shopify’s growth, the Board formed a Special Committee to consider potential changes to modernize the Company’s governance structure.
• The Special Committee, advised by its own legal counsel and financial advisor, spent time analyzing the situation and reviewing this proposal, and ultimately determined that taken together, these changes are in the best interest of the Company and minority shareholders.
• The Board and Special Committee are confident that this proposal will provide Shopify with new tools to position the Company for long-term success and the Board has unanimously recommended that shareholders vote in favor of the proposal at the Annual and Special Meeting to be held on June 7, 2022.

How did you arrive at the 40% voting power for the Founder Share (when combined with Mr. Lütke’s Class B shares)?

• The Special Committee determined the 40% threshold for Mr. Lütke was appropriate as it is generally consistent with the voting power Mr. Lütke would hold under the current share structure if Klister Credit Corp. were to convert its Class B shares into Class A shares (which is something that will follow approval of the proposal by shareholders).

When will the provisions go into effect?

• If the proposal is approved by shareholders, the Company will apply to the court to obtain a final order to approve the proposal. Soon after the final order is granted, the Company will file articles of arrangement giving effect to the proposal. The final order hearing is anticipated to take place in the days following the shareholder approval.

How many votes are needed to pass?

• The proposal is subject to the approval of
  • (1) at least two-thirds of the votes cast by Class A and Class B shareholders present in person or represented by proxy at the Company’s upcoming meeting, voting together as a single class, and
  • (2) at least the majority of the votes cast by Class A and Class B shareholders (excluding Mr. Lütke and his associates and affiliates) present in person or represented by proxy at the upcoming meeting, voting together as a single class.
• Shareholders of record as of the close of business on April 19, 2022 will be entitled to vote at the meeting.
• The Board and Special Committee are confident that this proposal will provide Shopify with new tools to position the Company for long-term success, and the Board has unanimously recommended that shareholders vote in favor of the proposal at the Annual and Special Meeting to be held on June 7, 2022.

If this proposal passes, how will it affect my shares?

• This proposal makes no changes to the terms of the Company’s existing Class A and Class B shares.
• However, if the proposal is approved, the total voting power of all Class A shareholders will increase from approximately 49% to approximately 59%.

How is this related to the share split proposal that’s also up for a vote?

• The two items are unrelated to each other.
• The separate proposal related to the share split makes the shares more affordable to a broader segment of the population.
• Making the shares more accessible enables Shopify to broaden and diversify our ownership base, an outcome which benefits all shareholders.