Facebook establishes dual-class stock structure

Facebook is establishing a dual-class stock structure, a move that could help pave the way to an initial public offering in the future. The company gave no time-line for such an offering and instead said it will help give current shareholders more power to guide the long-term vision of the company.

The Wall Street Journal reported that Facebook is converting all current shareholders to Class B stock, which carries ten times the voting power of Class A stock. Those shares will remain Class B shares unless the owner sells them during an initial public offering, when they will turn into Class A shares. A dual-class structure could make the stock less attractive to investors because they have weaker voting powers. Google structured its offering in a similar way, with two classes of stock.

A Facebook spokesperson gave this comment:

“Facebook is a private company so we don’t typically share details on stock-related matters. But we did introduce a dual class stock structure because existing shareholders wanted to maintain control over voting on certain issues to help ensure the company can continue to focus on the long-term to build a great business. This revision to the stock structure should not be construed as a signal the company is planning to go public. Facebook has no plans to go public at this time.”

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  1. Quora says:

    How does Mark Zuckerberg retain ownership of Facebook with only 24%? Does he have a final say in every decision?…

    Facebook has a dual-stock structure, similar to that of Google. In late 2009, Facebook converted all current shareholders’ shares to Class B stock. [1] Any new future investors after that point got Class A stock. Class B stock has 10 votes per share, …

  2. Quora says:

    Can a hostile takeover bid be made for Facebook at the current stock price? If yes, then who can make a bid?…

    Probably not ever. At least not until Zuckerberg sells his shares. For a takeover to be hostile, it has to go against management’s wishes. Management (Zuck + co) own the majority of the voting rights for Facebook. The current stock holders have 10X th…