Facebook drops plan to create new shares to keep founder Mark Zuckerberg in control

Facebook scrapped plans to create a new class of shares, a rare victory for outside investors in a battle for control of the world’s largest social media company.

The move would have let Chief Executive Officer Mark Zuckerberg keep voting control even while selling almost all his shares to fund philanthropic endeavours. On Friday, only days before he was scheduled to appear in court over the matter, Zuckerberg said he will proceed without the plan.

The decision follows a rash of technology executives creating special shares to control their companies, and may make similar structures more difficult to put in place in the future.

“Over the past year and a half, Facebook’s business has performed well and the value of our stock has grown to the point that I can fully fund our philanthropy and retain voting control of Facebook for 20 years or more,” Zuckerberg said. “As a result, I’ve asked our board to withdraw the proposal to reclassify our stock – and the board has agreed.”

Even as he drops plans for a new share class, Zuckerberg is sticking to a goal of giving away 99 per cent of the Facebook shares owned by him and his wife, Priscilla Chan. To do that, he intends to sell 35 million to 75 million Facebook shares in the coming 18 months to fund pursuits in education, science and advocacy, according to a blog he posted on Friday. That’s equivalent to US$6 billion to US$13 billion at current prices, and more than Zuckerberg planned to sell earlier.

Zuckerberg would have had to defend the move that some shareholders said diluted their power and was decided without their interests in mind.