Mark Zuckerberg, who holds majority voting control of the social networking site, may not be an absolute power at Facebook if he decides to quit or his services are terminated in the future.
According to a regulatory filing by the Facebook board to the US Securities and Exchange Commission on Thursday, the board will ask shareholders at its annual meeting on June 20 to vote on a proposal that would convert Zuckerberg’s Class B shares into Class A shares if he ceases to be at the helm, PCWorld reported.
Class A stock has one vote per share while Class B stock has 10 votes per share.
“The aim of the regulations is apparently to make it easier for the company to hire a top-quality successor to Zuckerberg who would not be shadowed by the founder or be from his family,” the report added quoting the filing.
Currently, Zuckerberg holds Class A and Class B common stock that collectively represents about 53.8 per cent of the company’s total voting power.
“Under current rules, if Zuckerberg were to quit the company or his employment terminated for any reason, he would not be required to give up his majority voting control,” the report said.
The measure, however, appears to be more of a precaution as the 32-year-old Facebook founder has not indicated any intention to quit.
The new terms will ensure that Facebook “will not remain a founder-controlled company after we cease to be a founder-led company”.
The new rules would “provide significant value to our company by incenting Mr. Zuckerberg to remain with our company”, the filing said.
In December, Zuckerberg and his wife Priscilla Chan pledged to donate 99 per cent of their Facebook shares — about $45 billion — to advance human potential and promote equality for children.
Declaring the “Chan Zuckerberg Initiative” as they welcomed their first girl child Maxima Chan Zuckerberg or “Max”, the couple said they have created a new foundation that would initially focus on “personalised learning, curing disease, connecting people and building strong communities.”
Zuckerberg owns about four million of Class A shares in Facebook and approximately 419 million Class B shares. Each Class B share is worth 10 votes apiece which gives Zuckerberg majority voting power and control over Facebook’s strategic direction.