Companies and their founders oftentimes have a special relationship – for better or for worse. Some companies become so intertwined with their founders, that the thought of that person leaving sends shivers down the spine of many investors and employees.
Apple and Steve Jobs are probably the best known example of such a dynamic, but Facebook and Mark Zuckerberg are probably a close second on that list. And that’s why Facebook is now trying to seemingly make it harder for Mark Zuckerberg to leave the company.
CNN is reporting that the social network’s shareholders will be voting on a proposal which would ensure that Mark Zuckerberg no longer retains control of Facebook in case he ever decides to leave or gets fired.
In a letter to the SEC, Facebook explained its position:
These new terms thus ensure that we will not remain a founder-controlled company after we cease to be a founder-led company.
Zuckerberg currently holds just shy of 54% of Facebook’s shareholder voting power, thanks in large part to the 419 million Class B shares that he owns. These are different from regular Class A shares which you’d buy on the market, because each class B share comes with 10 votes per share, instead of the regular one vote per share that class A owners get.
Under this proposal, all of his Class B shares would be converted into Class A shares, effectively ensuring that Zuckerberg no longer has a majority when it comes to shareholder votes. This would also work as an incentive against Zuckerberg ever deciding to leave the company.
On the other side of the aisle, in Facebook’s most recent financial reports, Zuckerberg announced a proposal to create a new class of shares, Class C, without any voting power and trading under a different stock market ticker. All class A and Class B share owners would automatically receive two Class C shares per A/B share.
If approved this would allow Zuckerberg to retain control over the company while also donating the vast majority of his shares and money to charity as he announced he would.