Facebook proposed a new stock scheme in a bid to keep founder and CEO Mark Zuckerberg in control. The social media giant's board of directors recently voted to create the new "C" class of non-voting shares.
Once the "three-for-one stock split" scheme is approved, two non-voting shares will be given to Facebook shareholders for every share they have. The proposal is set to be discussed and voted on by the shareholders during the tech giant's annual meeting set on June 20.
The new stock scheme is designed to allow Class C shares to go on trade for philanthropic initiatives' funding while keeping Zuckerberg in control. Alphabet Inc., Google's parent company, made a similar gameplay back in 2014.
In a letter to the shareholders, Zuckerberg shared that Facebook's founder-led structure has helped them maintain their attention to the company's mission as well as turn away from short-term pressures that strike blows to many companies.
The structure has helped Facebook build its business, expand its community and create value for its shareholders, Zuckerberg added.
"We're focused not on what Facebook is today, but on what it can be, and what it needs to be for our community. That means investing in areas like spreading connectivity, building artificial intelligence and developing virtual and augmented reality," said Zuckerberg.
In this letter to the shareholders, Zuckerberg also said that protection against climate change, educational system improvement and the elimination of disease by century's end are part of his ambitions.
Facebook's General Counsel Colin Stretch shared that the board believes Zuckerberg's management, creative vision and leadership account for a big chunk of the tech giant's success. Stretch also said Facebook's success in the future will also depend on this continued leadership.
In his letter, Stretch added that the board believes the proposed structure will reap many benefits for the company as well as its stakeholders.
First off, it will enable Facebook to focus on Zuckerberg's long-term vision. Secondly, it keeps Zuckerberg to remain active in his leadership role with Facebook. Thirdly, it will help in succession risk mitigation. Lastly, the structure will help in lessening any possible voting weakening in the future.
