What happens to Facebook if CEO Mark Zuckerberg moves on? The company is starting to wonder.
The social network will ask shareholders to vote on removing Zuckerberg’s majority control if he leaves the company, according to a proxy filing Thursday.
Zuckerberg owns about 419 million Class B shares and 4 million Class A shares, for 53.8 percent in voting power. (His voting power actually totals about 60 percent because he has proxy voting power for shares owned by co-founder Dustin Moskovitz.) Class A stock allows for one vote per share, while Class B stock has 10 votes per share. The proposal would convert Zuckerberg’s Class B shares into Class A shares once he no longer holds a leadership position in the Menlo Park company.
“If Mr. Zuckerberg or his descendants could maintain majority voting control indefinitely after he is no longer in a leadership role at the company, which is currently the case, it could be exceedingly difficult to attract and retain a high-quality replacement for Mr. Zuckerberg,” the filing says. “These new terms thus ensure that we will not remain a founder-controlled company after we cease to be a founder-led company.”
Although the 32-year-old founder has given no indication that he is leaving anytime soon — at the company’s April developers conference, Zuckerberg revealed Facebook’s 10-year plan — he’s young and has endless possibilities ahead of him.
He and his wife, Priscilla Chan, are among the world’s highest-profile philanthropists; in fact, also up for shareholder vote is a proposal to create a Class C stock, which would allow Zuckerberg to retain control of the company despite his and Chan’s pledge, made in December, to give 99 percent of their Facebook stock to charitable causes.
Might Zuckerberg also have a future in politics? He’s certainly stepped into the fray, including advocating for immigration reform and speaking out against “building walls.” And although he’s three years away from being old enough to run for president, speculation about the possibility surfaced recently after former Politico CEO Jim VandeHei wrote a Wall Street Journal op-ed in which he said: “Why not recruit Facebook’s Mark Zuckerberg or Sheryl Sandberg to head a third-party movement?” The flames were further fanned when the proxy statement that proposed the Class C stock in April contained the following language:
“Moreover, the New Certificate provides that all shares of Class B common stock will automatically convert into Class A common stock on the date that is (i) the third anniversary of the death of Mr. Zuckerberg or a Disability Event, if such Disability Event is continuing as of such anniversary date and (ii) one year following the date of termination of Mr. Zuckerberg as an Approved Executive Officer for Cause (subject to a 60-day cure period) or the Voluntary Resignation of Mr. Zuckerberg as an Approved Executive Officer, provided that Mr. Zuckerberg’s leave of absence or resignation would not constitute a Voluntary Resignation if it were in connection with his serving in a government position or office and if, at the time of such leave or resignation…”
The proposal about removing Zuckerberg’s majority control should he leave the company was designed by a special committee comprising Facebook directors Susan Desmond-Hellmann, Marc Andreessen and Erskine Bowles.
And lest anyone get the wrong idea, the committee members were just doing their job and aren’t anti-Zuck. From the filing: “The Special Committee believes these triggers would provide significant value to our company by incenting Mr. Zuckerberg to remain with our company.”
Facebook’s shareholder meeting will be held June 20.
Photo: Facebook CEO Mark Zuckerberg delivers the keynote address at Facebook’s F8 Developers Conference on April 12, 2016, in San Francisco, Calif. (Karl Mondon/Bay Area News Group)
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