Menu
New rules would make CEO Mark Zuckerberg lose control of Facebook if he quits

New rules would make CEO Mark Zuckerberg lose control of Facebook if he quits

The Facebook CEO now holds majority voting control of the social networking site

Facebook CEO Mark Zuckerberg would lose majority voting control of the social networking company if he quits his job or his services are terminated, according to new rules proposed by the board.

The rules, which were first mooted as part of a reclassification of Facebook’s shares to help meet Zuckerberg’s philanthropy plans, will be voted on by shareholders at an annual meeting on June 20. The aim of the regulations is apparently to make it easier for the company to hire a top-quality successor to Zuckerberg, who would not be shadowed by the founder or be from his family.

The measure seems to be more of a precaution as Zuckerberg has not indicated that he intends quitting his job.

The high-profile executive currently holds Class A and Class B common stock that collectively represents about 53.8 percent of the company’s total outstanding voting power. Under current rules, if Zuckerberg were to quit the company or his employment terminated for any reason, he would not be required to give up his majority voting control. Zuckerberg would also be able to pass Class B common stock shares, and potentially his majority voting control, to his descendants after his death, leading to voting control of the company passing across multiple generations, according to a regulatory filing Thursday by the company to the U.S. Securities and Exchange Commission.

Class A stock has one vote per share while Class B stock has 10 votes per share.

A Special Committee, appointed in August to look into the reclassification of Facebook’s capital or voting structure in view of Zuckerberg’s long-term plans to donate most of his stock to philanthropy, has recommended new terms that will ensure that Facebook “will not remain a founder-controlled company after we cease to be a founder-led company,” according to the proxy filing.

The committee and the board hold that it would be tougher to attract a qualified successor to Zuckerberg if he continued to retain majority voting control of the company. To avoid Zuckerberg having voting control of the company if he leaves his post, the committee has proposed new automatic triggers, which, with some exceptions, “require the conversion of all shares of Class B common stock into shares of Class A common stock if he is no longer in a leadership role at our company.”

The triggers would “provide significant value to our company by incenting Mr. Zuckerberg to remain with our company,” according to the filing.

Zuckerberg announced in December that he would give to philanthropy, through the Chan Zuckerberg Initiative, 99 percent of his shares in the company. The CEO is said to have informed the committee that he planned to sell or gift no more than US$1 billion of the company’s capital stock each year for the next three years, and that he aimed to retain his majority voting position for the foreseeable future.

In a regulatory filing earlier this year, Facebook said that it aimed to create a new class of publicly listed, but non-voting Class C capital stock and, if approved, to issue a one-time dividend of two shares of that new class of capital stock for each outstanding Class A and Class B share held by stockholders.

The reasoning was that the Class C shares could be used for Zuckerberg’s initial philanthropy aims without he losing control of the company, as the Class C stock would be non-voting shares. “The issuance of shares of Class C capital stock could prolong the duration of Mr. Zuckerberg's control of our voting power and his ability to elect all of our directors and to determine the outcome of most matters submitted to a vote of our stockholders,” according to the filing on Thursday. Zuckerberg is also likely to have the final say during the shareholder vote on June 20.


Follow Us

Join the New Zealand Reseller News newsletter!

Error: Please check your email address.

Featured

Slideshows

Sizing up the NZ security spectrum - Where's the channel sweet spot?

Sizing up the NZ security spectrum - Where's the channel sweet spot?

From new extortion schemes, outside threats and rising cyber attacks, the art of securing the enterprise has seldom been so complex or challenging. With distance no longer a viable defence, Kiwi businesses are fighting to stay ahead of the security curve. In total, 28 per cent of local businesses faced a cyber attack last year, with the number in New Zealand set to rise in 2017. Yet amidst the sensationalism, media headlines and ongoing high profile breaches, confusion floods the channel, as partners seek strategic methods to combat rising sophistication from attackers. In sizing up the security spectrum, this Reseller News roundtable - in association with F5 Networks, Kaspersky Lab, Tech Data, Sophos and SonicWall - assessed where the channel sweet spot is within the New Zealand channel. Photos by Maria Stefina.

Sizing up the NZ security spectrum - Where's the channel sweet spot?
Kiwi channel comes together for another round of After Hours

Kiwi channel comes together for another round of After Hours

The channel came together for another round of After Hours, with a bumper crowd of distributors, vendors and partners descending on The Jefferson in Auckland. Photos by Maria Stefina.​

Kiwi channel comes together for another round of After Hours
Consegna comes to town with AWS cloud offerings launch in Auckland

Consegna comes to town with AWS cloud offerings launch in Auckland

Emerging start-up Consegna has officially launched its cloud offerings in the New Zealand market, through a kick-off event held at Seafarers Building in Auckland.​ Founded in June 2016, the Auckland-based business is backed by AWS and supported by a global team of cloud specialists, leveraging global managed services partnerships with Rackspace locally.

Consegna comes to town with AWS cloud offerings launch in Auckland
Show Comments