Mark Zuckerberg tightens control over Facebook’s future by restructuring shares as sales surge
Published 28/04/2016 | 08:48
Facebook plans to restructure its shares to give Mark Zuckerberg ultimate control even as the social network’s founder plans to sell most of his stake in the company.
Mr Zuckerberg will solidify his majority voting power over Facebook under a plan that will see shareholders issued a new class of share that comes without any voting power.
Facebook revealed the proposal, which will allow Mr Zuckerberg to have the final say in shareholder votes, as it posted a trebling of profit that sent shares soaring on Wednesday night.
The Facebook founder, worth around $50bn (£34bn), has pledged to donate 99pc of his fortune to philanthropic efforts to combat disease and climate change by selling Facebook stock.
The new share structure will see two new shares, which come without voting rights, given to investors for every current share they hold.
By selling off his own non-voting shares over the coming years, while retaining the shares that do carry voting power, Mr Zuckerberg will be able to reduce his stake in Facebook without losing the 60pc of voting power that the current share structure gives him.
“I’ll be able to keep founder control of Facebook so we can continue to build for the long term, and [my wife] Priscilla and I will be able to give our money to fund important work sooner,” he said.
“We have always been a founder-led company. This structure has helped us resist the short term pressures that often hurt companies.”
The stock split mirrors a move made by Google two years ago that gives its founders Larry Page and Sergey Brin control of the company.
“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,” Facebook’s General Counsel Colin Stretch said.
The announcement came as Facebook said profits in the first quarter of the year had trebled to $1.5bn as it signs up more users and gains an increasingly large portion of online advertising.
More than 1.65bn people now use Facebook around the world, and the company now makes 82pc of its advertising revenue from mobile devices.
Shares rose more than 9pc in after-hours trading.