“I plan on being involved in and running Facebook for a very long time.” So said Facebook Inc (FB) CEO Mark Zuckerberg during the company’s annual shareholder meeting, in which a Facebook stock split became official.
FB investors voted to approve a proposal for the issuance of 5.7 billion shares of Class C stock on Monday, leaving Zuckerberg free to donate “a substantial amount” of shares without ceding control of the company.
Essentially, FB is undergoing a 3-for-1 stock split, with investors getting two shares of Class C stock for every share of Class A or B stock they own. Class C stock, naturally, does not have voting power.
More Facebook Stock, Little Real Impact
So does this mean current Facebook stock holders are being diluted? Well, not exactly.
Our own James Brumley tackled the issue in April, urging investors not to sweat Facebook C shares:
“While it would dilute the voting power for all owners of FB stock, the B shares — which aren’t publicly traded — control ten votes for every vote apportioned to a FB share. Zuckerberg owns 419 million B shares, effectively giving him 54% control of the company. In other words, the proposal doesn’t dilute the voting power for common shareholders, because that voting power was already diluted by all those B shares. The creation of C shares simply facilitates charitable giving and acquisitions; they’ll be used like currency, without chipping away control of the company.”
Zuckerberg isn’t the only one whose job is safe, either. Billionaire Peter Thiel, who recently body slammed Gawker Media all the way into bankruptcy, was re-elected to Facebook’s board of directors.
Facebook’s stock price isn’t reflecting much opinion one way or the other, with shares fractionally higher to mimic the broader market’s sheepish move north.
But the fact that Zuckerberg is securely in the driver’s seat should, if nothing else, be a positive note for anyone holding or considering buying into FB stock.
