Facebook drops plan to change share structure, avoiding lawsuit

Yolanda Curtis
September 25, 2017

The announcement comes days before Zuckerberg had been scheduled to testify in a shareholder lawsuit that opposed the plan to reclassify stock, and a month after the S&P 500 said it would bar companies with multiple classes of shares from its index.

The plan unveiled previous year had been created to allow founder and chief executive Mark Zuckerberg to maintain voting control as he divests to fund a philanthropic initiative with his wife Priscilla. In December 2015 Zuckerberg and his wife, Priscilla Chan, a pediatrician, pledged to give away 99 per cent of their Facebook shares to charity.

Zuckerberg is expected to sell shares that could raise upto Dollars 12 billion. The ad sales were linked to a Russian "troll" farm known for spreading propaganda, and were, "connected to 470 inauthentic accounts and Pages in violation of our policies", Facebook said.

A class action lawsuit filed in a DE court to block the share reclassification plan was scheduled to get under way shortly, with Zuckerberg among those expected to be called on to testify.

Facebook CEO Mark Zuckerberg has said he wants to sell 35-75 million Facebook shares in the next 18 months to fund the company's work in education, science and advocacy.

A group of investors had sued over the proposal, which would have allowed Mr Zuckerberg to retain voting control of Facebook but own a smaller share of the company's shares.

Google, now Alphabet Inc, proposed a similar stock reclassification in 2012, and court records show that Facebook's general counsel suggested Zuckerberg could use it as a model for Facebook.

"We will continue our investigation into what happened on Facebook in this election".

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