Facebook proposes new share structure

It isn’t just its stellar performance for the quarter that’s turning heads, Facebook’s proposed new share structure is also creating lot of buzz all around. After posting record high $5.8 billion revenue, Facebook has contended that its new class of non-voting shares will set it up for further success.

The Social networking company has proposed creating a new non-voting Class C stock, issuing two new shares for each outstanding Class A and Class B share held, a 3-for-1 stock split. Class A shares would continue to trade under the “FB” ticker, with the Class C shares under a different symbol. This reclassification move is aimed at letting Chief Executive Officer Mark Zuckerberg give away his wealth without abandoning control of the social media platform he founded.

“I’ll be able to keep founder control of Facebook so we can continue to build for the long term, and Priscilla (Zuckerberg’s wife) and I will be able to give our money to fund important work sooner,” Zuckerberg said, in a statement. The “important work” is a new philanthropy project focusing on human potential and equality.

“Him staying intact and moving forward and guiding the company is critical. This is his baby,” said Daniel Morgan, senior portfolio manager at Synovus Trust Company, which owns about $40 million worth of Facebook shares.

According to Facebook’s proxy statement, Zuckerberg owned 4 million Class A shares and 419 million Class B shares, which have 10 times the voting power of A shares. Combined, he held 54 percent of the voting power of Facebook.

The company said that it aims to mitigate “succession risk” and “potential future voter dilution,” and have a structure with Mark in“an active leadership role at Facebook.” Stock owners would basically own three times as many shares as they did before, while the total number of outstanding shares will also triple.

The proposal’s adoption is subject to approval by Facebook shareholders at its 2016 annual meeting in June.