Facebook CEO and Co-founder Mark Zuckerberg can now retain voting control of the company and also be able to fund his philanthropic foundation aimed at eliminating diseases and also personalized education for children without FB having to issue a proposed non-voting class of stock that faced shareholder resistance. Facebook announced on Friday about its withdrawal from its previous plan to issue Class C no-vote stock leading to the resolution of the shareholder lawsuit seeking to block the corporate governance revamp.
Mark Zuckerberg has instead said he can sell a smaller ration of his stake in the company in other to give enough capital to his Chan Zuckerberg Initiative.
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Facebook as a company has performed well and the value of their stock has grown in the past year and a half that Mark can fully fund his philanthropy and retain the voting control of Facebook for about 20 years – Says Zuckerberg. Price for Facebook’s shares has amounted to roughly 45% from $117 to $170 since the Class C stock plan was announced and FB is now valued at $495 billion.
Lee Rudy, the partner at Kessler Topaz Meltzer and Check LLP (representatives of the plaintiffs in the lawsuit seeking to block the no-vote share creation) has written that they are gratified that the FB and Zuckerberg have agreed not to proceed with the reclassification they were challenging. Mark was slated to testify in the suit this month which he will no longer have to. This outcome is a positive one for FB stockholders.
Zuckerberg has also said that His’ and Priscilla plans to give away 99% of their FB shares during their lifetime not been altered. They also planning to accelerate their work and sell more of those shares sooner. Mark said he is anticipating of selling 35-75 million ($5.95 - $12.75 billion worth of FB shares) FB shares within the next 18 months in other to fund their work in education, science, and advocacy.
In April 2016 when Zuckerberg announced the plan, he said that being a founder-led company where he controls enough votes to always alter FB decisions lets FB resist the short-term pressures that often hurt companies. He said that by issuing non-voting shares, he will be able to control FB decision making and he and Priscilla will be able to give their money to fund important work.
With Marks decision to sell shares, it’s unknown what might happen to Marks' total control on FB in the future.
Failure of the plan for Class C shares is a blow to FB board member Marc Andreessen, who Bloomberg revealed had coached Zuckerberg through enforcing the proposed plan through the rest of the board. Due to Zuckerberg’s power in the company, Andreessen is not likely to be ousted.
Though Zuckerberg has the power to shape FB’s decisions. His instincts in business have proven helpful over the years as seen in the acquisition of Instagram and WhatsApp. His enormous prioritization of users experience has made sure FB never goes out of the limelight.
Mark had told investors that when FB has launched that the sole mission was for sociality and not a company, though FB has flourished into one of the world’s most successful business in part.
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