A Facebook Inc (FB.O) shareholder filed a proposed class action lawsuit on Friday in a bid to stop the company’s plan to issue new Class C stock, calling the move an unfair deal to entrench Chief Executive Mark Zuckerberg as controlling shareholder.<\/p>\n
The lawsuit, filed in the Delaware Court of Chancery, followed the social networking company’s announcement on Wednesday of its plan to issue the shares.<\/p>\n
The rejiggering of Facebook’s share structure is effectively a 3-for-1 stock split. Zuckerberg’s said in December that he intends to put 99 percent of his Facebook shares into a new philanthropy project focusing on human potential and equality.<\/p>\n
The lawsuit contends that a Facebook board committee which approved the share deal “did not bargain hard” with Zuckerberg “to obtain anything of meaningful value” in exchange for granting Zuckerberg added control.<\/p>\n
In a statement, Facebook said the plan “is in the best interests of the company and all stockholders.” The company has said keeping Zuckerberg at the helm is key to its future success.<\/p>\n
Facebook plans to create a new class of shares that are publicly listed but do not have voting rights. Facebook will issue two of the so-called “Class C” shares for each outstanding Class A and Class B share held by shareholders. Those new Class C shares will be publicly traded under a new symbol.<\/p>\n
Zuckerberg “wishes to retain this power, while selling off large amounts of his stockholdings, and reaping billions of dollars in proceeds,” the lawsuit said.<\/p>\n
“The issuance of the Class C stock will, in effect, have the same effect as a grant to Zuckerberg of billions of dollars in equity, for which he will pay nothing,” it said.<\/p>\n
Google settled a lawsuit in 2013 shortly before trial which cleared the way for that company to execute a similar plan.<\/p>\n
–<\/p>\n
Source: Reuters<\/p>\n","protected":false},"excerpt":{"rendered":"
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