Mark Zuckerberg will forever and always control Facebook

Mark Zuckerberg controls Facebook right now.

And on Wednesday, the company made it official that this will not be changing.

Alongside its first quarter results, which crushed expectations, the company announced it will create a new Class C stock that has the same economic rights as the current Class A and Class B shares but has no voting rights.

Which, if we’re being honest, doesn’t change much.

Facebook currently has a dual-class structure: Class A shares, which are what trade under the ticker “FB” on public markets and have one vote per share, and Class B shares, which have 10 votes per share and is what company insiders own. The Class B shares don’t trade on an exchange.

Now, there will be a new “Class C” stock, which give investors the ability to own Facebook but have no say on company decisions. There will also be a new ticker for the Class C stock. (Like “FBC” or something.)

So again, Zuckerberg has the power now and will have the power in the future. This move merely formalises it.

Here’s how Facebook describes the move:

For each outstanding Class A and Class B share held by our stockholders, Facebook intends to issue two new Class C shares as a one-time stock dividend. The Class C shares will have the same economic rights as the existing Class A and Class B shares. The primary difference is that the Class C shares are non-voting.

This proposal will be subject to stockholder approval at the annual meeting of stockholders on June 20 (note: Zuckerberg has enough shares that all he needs to do is vote in favour of this action and it’s done), and the actual record date for the payment of the Class C stock dividend will be set by the board at a later date. As part of this proposal, the preservation of this new multi-class capital structure would be based on Mark’s maintaining an active leadership role at Facebook.

This is not a traditional governance model, but Facebook was not built to be a traditional company. The board believes that a founder-led approach has been and continues to be in the best interests of Facebook, its stockholders, and the community.

So to recap:

  • This moves codifies the governance structure that has been in place at Facebook.
  • As a shareholder you now know for sure that all future decisions will be finalised by Zuckerberg.
  • If you own one share of “FB” you’ll own two shares of “FBC” or whatever the new ticker is.
  • Those shares won’t have a vote.

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