In disclosing its earnings for the first quarter of 2016 today, Facebook had a big announcement to make: The company is proposing a new non-voting Class C stock. The goal is twofold: keep cofounder and chief executive Mark Zuckerberg in charge, and also help him and wife Priscilla Chan accelerate their philanthropic activities.
Of course, the creation of this third class of stock would have implications.
“If approved, to issue a one-time dividend of two shares of that new class of capital stock for each outstanding Class A and Class B share held by stockholders,” Facebook general counsel Colin Stretch wrote in a blog post. Stockholders would get three times as many shares as they have before the change, which would “[allow] the company to maintain focus on Mark’s long-term vision for Facebook” and “[encourage] Mark to remain involved with Facebook in a leadership role,” Stretch wrote.
And of course, this will need to be approved by shareholders. The vote will go down at Facebook’s annual shareholder meeting on June 20.
But for Zuckerberg especially, this is a very big deal. Here he is explaining it in a blog post:
While helping to connect the world will always be the most important thing I do, there are more global challenges that I feel a responsibility to help solve — like helping to cure all diseases by the end of this century, upgrading our education system so it’s personalized for each student, and protecting our environment from climate change. That’s why Priscilla and I created the Chan Zuckerberg Initiative and committed to give 99 percent of our Facebook shares during our lives to advance human potential and promote equality.
Today, Facebook’s board of directors is announcing a proposal to create a new class of stock that will allow us to achieve both goals. I’ll be able to keep founder control of Facebook so we can continue to build for the long term, and Priscilla and I will be able to give our money to fund important work sooner. Right now, there are amazing scientists, educators and doctors around the world doing incredible work. We want to help them make a bigger difference today, not 30 or 40 years down the road.
Facebook stock was up 8 percent in after-hours trading.
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