Founder Mark Zuckerberg to have final say on matters such as election of directors
Facebook founder and CEO Mark Zuckerberg will retain almost complete control of the company despite it going public, following the announcement of plans for a stock market flotation this week.
According to the newly released Facebook IPO filing, Zuckerberg will hold 28.4 percent of company shares.
But this stock has greater voting strength than that to be sold in the IPO, and will give Zuckerberg 56.9 percent control over votes.
The stock Zuckerberg holds is Class B, which carries 10 votes per share. The stock offered in the IPO is Class A, which allows just one vote per share.
Zuckerberg has final say
This will give Zuckerberg the final say on company matters, including the right to choose directors, which may see new investors squeezed out of boardroom decisions.
The filing states: ‘Zuckerberg has the ability to control the outcome of matters submitted to our stockholders for their approval, including the election of directors and any merger, consolidation or sale of all or substantially all of our assets.
[The structure] provides Zuckerberg with the ability to control the outcome of matters requiring stockholder approval, even if he owns significantly less than a majority of the shares.’
IPO details
Facebook aims to raise $5 bn in the stock market flotation, with the company valued at between $75 bn and $100 bn.
The IPO is expected to be the biggest sale of shares by a social media company, far surpassing those of Google ($1.7 bn), Groupon ($750 mn) and Zynga ($1 bn).
The Brunswick Group has been retained to help Facebook with investor relations advice, while Morgan Stanley will be the lead adviser on the IPO.
The social networking site has 845 mn users and made a profit of $1 bn in 2011, notes the filing.
