At Facebook’s annual meeting held Monday, CEO Mark Zuckerberg assured investors that he plans to stay associated and work with the company for a very long time.
The Facebook chief now plans to give away total control of the company after he quits but no one will have the power to strip him off his position before that.
The major change that comes during the latest annual meeting is to adapt a three-for-one stock split system, which was approved by shareholders on Monday. Earlier, the Palo Alto based company had a dual class share structure—class A and B—structure, but now its adding class ‘C’ shares, which are basically stocks that do not entitle buyers to any voting capabilities.
However, as reports pointed out, it was just a ceremonial display for the 13 other major shareholders as the Facebook chief has 53.8 per cent voting shares, which goes up to 60 percent in case of a proxy voting from co-founder Dustin Moskovitz.
With the introduction of the new share structure, the company plans to issue two new shares of class ‘C’ by dividing each share of current outstanding class ‘A’ and class ‘B’.
To be more precise, Class ‘A’ shares are those which are made available to everyday investors and class ‘B’ shares or supervoting shares can only be owned by company insiders and these people are entitled to a whopping 10 votes per share.
In a layman’s term, this move will significantly bolster Zuckerberg’s control over the company’s operations. By introducing the new class ‘C’ shares, he will be able to retain voting rights even after giving away 99 per cent shares during his lifetime for welfare initiatives.
However, to get the new structure board-approved, he announced that all his class ‘B’ shares will automatically transform to class ‘A’ shares three years after he dies or one year after he resigns. This literally means that Zuckerberg traded away the authority to appoint his successor for utmost control during his reign at the company.
The move is similar to Alphabet, which also added non-voting class ‘C’ shares amid heavy opposition from the company’s shareholders; founders Sergey Brin and Larry Page had much more power in terms of share voting rights.
The new structure which solidifies Zuckerberg’s stance in the company has not been well-accepted by investors who has vehemently retaliated saying that the company’s move to ‘strip the shareholders of their rightful say’.
