WILMINGTON, Del. (Reuters) - Facebook Inc Chairman Mark Zuckerberg abandoned plans on Friday to create a new class of company stock with no voting power, which was meant to be a way for Zuckerberg to retain control over the company he founded while fulfilling a pledge to give away his wealth.
Zuckerberg on Friday said that he could meet the charity pledge and maintain voting control of Facebook (FB.O) without the change. His decision followed a shareholder lawsuit opposed to the creation of a new class of stock.
Zuckerberg said in a post on Facebook that the company’s stock had performed well enough that he could fund his philanthropy by selling stock for at least 20 years and still retain voting control of the company. In December 2015 Zuckerberg and his wife, Priscilla Chan, a paediatrician, pledged to give away 99 percent of their Facebook shares to charity.
According to court records, Zuckerberg owns more than 400 million shares of Facebook. That would value his holdings at a minimum of $68.2 billion (£50.4 billion), based on the company’s closing share on Friday of $170.54.
Zuckerberg said he wanted to help solve global challenges “like curing all diseases in our children’s lifetime and personalizing education for every student.”
Zuckerberg said that over about the next 18 months he planned to sell 35 million to 75 million shares of Facebook, which at Friday’s closing price would raise $13 billion.
The decision came as Zuckerberg was scheduled to testify on Tuesday in Wilmington, Delaware, in a shareholder lawsuit seeking to halt the Class C stock plan, which had been approved by shareholders.
Sjunde AP-Fonden, a Swedish national pension fund, and The Amalgamated Bank sued last year, saying that Zuckerberg should have to pay for the right to retain control while selling stock.
“We brought this case challenging a significant change in Facebook corporate governance, and by agreeing to abandon the reclassification we got everything we could have hoped to get,” said Lee Rudy of shareholder law firm Kessler Topaz Meltzer & Check.
Rudy said the Class C proposal was rejected by 80 percent of minority shareholders in a vote last year. Zuckerberg controls 60 percent of Facebook’s stockholder vote, which helped carry the proposal.
Google, now Alphabet Inc (GOOGL.O), proposed a similar stock reclassification in 2012, and court records show that Facebook’s general counsel suggested Zuckerberg could use it as a model for Facebook.
Google settled with shareholders in a deal that included a $522 million dividend, payable under certain conditions.
Withdrawing the share plan comes as Facebook faces pressure over advertisements on the social network and the role they may have played in last year’s U.S. presidential election.
President Donald Trump questioned on Friday the company’s decision to overhaul how it handles paid political ads amid investigations into alleged Russian interference in U.S. elections.
Reporting by Tom Hals; Editing by Sandra Maler and Leslie Adler