Facebook founder and chairman Mark Zuckerberg abandoned plans on Friday to create a new class of company stock with no voting power. This new stock category was meant to be a way for Zuckerberg to retain control over the company while fulfilling a pledge to give away his wealth.
Zuckerberg said that he could meet the charity pledge and maintain voting control of Facebook without the change. His decision to rule out the idea followed a shareholder lawsuit opposed to the creation of a new stock class.
In December 2015 Zuckerberg and his wife, Priscilla Chan, a pediatrician, pledged to give away 99 percent of their Facebook shares to charity.
Zuckerberg said in a post on Facebook that the company’s stock had performed well enough that he could fund his philanthropy by selling stock for at least 20 years and still retain voting control of the company. Per official records, Zuckerberg owns more than 400 million shares of Facebook. His holdings have been valued at a minimum of $68.2 billion, based on the company’s closing share price of $170.54 on Friday.
Zuckerberg said that over about the next 18 months he plans to sell 35 million to 75 million shares of Facebook, which at Friday’s closing price would raise $13 billion.
“We brought this case challenging a significant change in Facebook corporate governance, and by agreeing to abandon the reclassification, we got everything we could have hoped to get,” said Lee Rudy of shareholder law firm Kessler Topaz Meltzer & Check.
Lee Rudy said that the Class C (the new shareholder class) proposal had been rejected by 80 percent of minority shareholders in a vote last year.
Zuckerberg controls 60 percent of Facebook’s stockholder vote, and the remaining 40 percent of the shareholders constitute the minority, whose interests need to be taken into account. It was Zuckerberg’s voting power that helped carry the proposal. Since a large percentage of the minority shareholders did not approve of the idea, it was finally ruled out.