Facebook's non-voting share scheme solidifies Zuckerberg control
The social media giant announced Wednesday that it will be creating a class of non-voting shares, a move that will let Mark Zuckerberg retain his leadership.
Facebook is making some changes to its share structure.
On Wednesday, Facebook announced that it will be creating a new group of non-voting shares. The move will let Mark Zuckerberg give away much of his vast wealth, a plan he announced in December of last year, without giving up any control of the social media giant that he founded.
"When I look out at the future, I see more bold moves ahead of us than behind us," Mr. Zuckerberg said in a statement. "I am committed to our mission and to leading Facebook there over the long term."
Under the plan, the non-voting "Class C" shares will be publicly listed and traded, but have no voting power. Two "Class C" shares will be issued for every Class A and B share held by stockholders, but the percentage of ownership they hold in Facebook will not change.
It's not unusual for companies to make this type of move, especially in the technology sector. Alphabet, Google's parent company, also trades non-voting shares.
The goal of the new structure is to ensure that the company preserves its growth over the long-term, specifically under Zuckerberg's leadership and direction, according to a press release.
"The board believes that a large part of Facebook's success has stemmed from the leadership, creative vision and management of Mark Zuckerberg, and that the company's future success will depend on Mark's continued leadership," Colin Stretch, Facebook's General Counsel, said in the release. Regarding the proposed change, Mr. Stretch said, "This is not a traditional governance model, but Facebook was not built to be a traditional company."
But the change will also enable Zuckerberg, who intends to give away 99 percent of his Facebook shares to charitable causes over the course of his life, to pursue his philanthropic goals. Under the new structure, Zuckerberg will maintain an active leadership role at Facebook and pursue the Chan Zuckerberg Initiative that he created with his wife, Dr. Priscilla Chan.
Zuckerberg and his wife are part of a new class of ultra-wealthy philanthropists who are choosing to use their money in different ways. They're also more unusual in that they have committed their money to charitable causes relatively early on in their careers: both Zuckerberg and Chan are in their early 30s.
Facebook filed a preliminary proxy statement regarding the new structure on Wednesday, but no official date has been set yet for the change. It still has to be approved by stockholders at the annual stockholder meeting in late June.