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Facebook proposes new non-voting shares to keep Mark Zuckerberg at helm

Facebook proposes new non-voting shares to keep Mark Zuckerberg at helm

Social media giant Facebook on Wednesday announced to offer shareholders two additional non-voting shares for each single share they already hold. The move will allow Zuckerberg to remain in charge even as he gives away the bulk of his holdings to charity.

Facebook CEO Mark Zuckerberg Facebook CEO Mark Zuckerberg

Social media giant Facebook on Wednesday announced to offer shareholders two additional non-voting shares for each single share they already hold. The move will allow Zuckerberg to remain in charge even as he gives away the bulk of his holdings to charity as he announced last year with his wife.

When Facebook CEO Mark Zuckerberg said he would give away all of his Facebook shares, many wondered how he would do and still keep the control of the company he founded.

In a major rejig of its share structure, the company has proposed three-for-one stock split that will create a new class of shares that are publicly listed but have no voting rights. The move is aimed at letting CEO Mark Zuckerberg retain the managing control even as he plans to spend 99 per cent of his wealth for philanthropic endeavours.

Under this new scheme, Facebook will issue two of the so-called "Class C" shares for each outstanding Class A and Class B share held by shareholders. Those new Class C shares will be publicly traded under a new symbol. So, if someone who held a single Class A share at Wednesday's closing price of $108.76 would end up instead with one Class A share and two Class C shares, each of which would be priced at $36.25.

If this proposal is approved, which is almost certain as Mark Zuckerberg controls most of the voting power. Facebook shareholders will get two additional, non-voting shares for each single share they have. The change will allow Zuckerberg - who has a lot of Class B shares that carry 10 votes compared to the Class A shares which carry one - to sell the new Class C (non-voting) shares for his philanthropic endeavours without relinquishing any voting control.

The company said in a filing, its plan was designed to keep Zuckerberg at the helm of Facebook, which it believes is key to Facebook's future success.

"Him staying intact and moving forward and guiding the company is critical. This is his baby," said Daniel Morgan, senior portfolio manager at Synovus Trust Company, which owns about $40 million worth of Facebook shares.

According to Facebook's most recent proxy statement, Zuckerberg owned 4 million Class A shares and 419 million Class B shares, which have 10 times the voting power of A shares. Combined, he held 54 per cent of the voting power of Facebook.