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Zuckerberg won't create new Facebook share class after shareholder lawsuit

It would have helped him to retain control of the company and fund his pledge to give his wealth to charity

Reuters  |  Wilmington 

Mark Zuckerberg
Mark Zuckerberg | Photo: Sanjay K Sharma

Inc Chairman abandoned plans on Friday to create a new class of stock with no voting power, which was meant to be a way for Zuckerberg to retain control over the he founded while fulfilling a pledge to give away his wealth.

Zuckerberg on Friday said that he could meet the pledge and maintain voting control of without the change. His decision followed a shareholder lawsuit opposed to the creation of a new class of stock.

Zuckerberg said in a post on that the company's stock had performed well enough that he could fund his by selling stock for at least 20 years and still retain voting control of the In December 2015 Zuckerberg and his wife, Priscilla Chan, a pediatrician, pledged to give away 99 percent of their to

According to court records, Zuckerberg owns more than 400 million of That would value his holdings at a minimum of $68.2 billion, based on the company's closing share on Friday of $170.54.

Zuckerberg said he wanted to help solve global challenges "like curing all diseases in our children's lifetime and personalising education for every student."

Zuckerberg said that over about the next 18 months he planned to sell 35 million to 75 million of Facebook, which at Friday's closing price would raise $13 billion.

The decision came as Zuckerberg was scheduled to testify on Tuesday in Wilmington, Delaware, in a shareholder lawsuit seeking to halt the Class C stock plan, which had been approved by shareholders.

Sjunde AP-Fonden, a Swedish national pension fund, and The Amalgamated Bank sued last year, saying that Zuckerberg should have to pay for the right to retain control while selling stock.

"We brought this case challenging a significant change in 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.

Rudy said the Class C proposal was rejected by 80 per cent of minority shareholders in a vote last year. Zuckerberg controls 60 per cent of Facebook's stockholder vote, which helped carry the proposal.

Google, now Alphabet Inc , proposed a similar stock reclassification in 2012, and court records show that Facebook's general counsel suggested Zuckerberg could use it as a model for

Google settled with shareholders in a deal that included a $522 million dividend, payable under certain conditions.

Withdrawing the share plan comes as faces pressure over advertisements on the social network and the role they may have played in last year's US presidential election.

President Donald Trump questioned on Friday the company's decision to overhaul how it handles paid political ads amid investigations into alleged Russian interference in US elections.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Sat, September 23 2017. 14:25 IST