Whenever these founding families of publicly traded businesses decide to sell stock, they often encounter the possibility that they could someday be ousted from their control of the company because of the waning voting influence they may have over the company as they sell their shares (and in many ways, this is perfectly fair. Someone who owns 1,000 shares of a company should have 10x the input of someone who owns 100 shares).
But often times, these founders want to liquidate their shares and diversify while also maintaining their grip over the company. The most common way to effectuate the sale of stock while maintaining control occurs through the issuance of multiple classes of stock with different voting rights.
For Ralph Lauren, he has created Class B shares for The Ralph Lauren Company that have ten votes per share of the Class A shares that are traded on the stock market. If he ever wants to sell the shares (and he and his family have sold approximately $1.5 billion worth since 2010), then he needs to convert the Class B shares into Class A shares in order to do so.
If you look at the governing document (Ralph Lauren’s Amended and Restated Certificate of Incorporation), there is a section entitled “Ralph Lauren Permitted B Holder” that describes who may own Class B shares, and it is limited to Ralph Lauren, his wife, their lineal descendants, and any trusts acting on their behalf. As a result of this arrangement, Ralph Lauren controls 8 of the 11 Board Seats for Polo Ralph Lauren Corporation, and therefore can run the company even though his family only maintains a roughly 20% economic interest in the company (calculated by assuming that every B share were converted to an A share).
Long-standing legal rules (especially if the company is incorporated in Delaware like Ralph Lauren is) permit Class B share arrangements that wield disproportionate governance power compared to the level of economic ownership in the company. For those who run small, local businesses that they want to sell but continue to run, the creation of Class B shares that entitle the family to run the company post-sale is often underutilized way to accomplish this. Of course, when Class A shareholders do not get to obtain the expected voting power that would be consistent with their acquired economic interest in the business, the market value of the shares tend to suffer accordingly.