Facebook has backed down from a controversial issue
An eleventh hour move by Facebook has averted a class action trial due to start Tuesday.
In line with some of his billionaire peers, Facebook founder and CEO Mark Zuckerberg has pledged to give away his wealth during his lifetime.
While that’s a worthy commitment, most of his wealth comes from his stock holding in the company so to sell-off large blocks of his shares would reduce his voting majority.
He recently revealed that he will sell of up to 75 million of his company stock worth almost U$13 billion over the next 18 months.
The proposed solution to the voting problem agreed by a special committee of Facebook directors, was to issue a new class of share which would have allowed Zuckerberg to retain a majority vote even as his actual shareholding was reduced.
The shareholder class action was brought by institutional investors including Amalgamated Bank and Ap7 Safa, a fund managed by Sweden’s state pension fund.
The trial was due to start today (Sep. 26) but Facebook has now backed down, ending the lawsuit filed in 2016 in which shareholders said the issue would have allowed Zuckerberg an unfair economic advantage.
"We're thrilled that Facebook has dropped the reclassification," said attorney Stuart Grant of Grant & Eisenhofer, noting that
shareholders were not seeking economic or other damages against the company. "Stopping the issuance of the non-voting C shares is all the relief we were asking for at trial. Today's move is a total victory for stockholders."
In line with some of his billionaire peers, Facebook founder and CEO Mark Zuckerberg has pledged to give away his wealth during his lifetime.
While that’s a worthy commitment, most of his wealth comes from his stock holding in the company so to sell-off large blocks of his shares would reduce his voting majority.
He recently revealed that he will sell of up to 75 million of his company stock worth almost U$13 billion over the next 18 months.
The proposed solution to the voting problem agreed by a special committee of Facebook directors, was to issue a new class of share which would have allowed Zuckerberg to retain a majority vote even as his actual shareholding was reduced.
The shareholder class action was brought by institutional investors including Amalgamated Bank and Ap7 Safa, a fund managed by Sweden’s state pension fund.
The trial was due to start today (Sep. 26) but Facebook has now backed down, ending the lawsuit filed in 2016 in which shareholders said the issue would have allowed Zuckerberg an unfair economic advantage.
"We're thrilled that Facebook has dropped the reclassification," said attorney Stuart Grant of Grant & Eisenhofer, noting that
shareholders were not seeking economic or other damages against the company. "Stopping the issuance of the non-voting C shares is all the relief we were asking for at trial. Today's move is a total victory for stockholders."
