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Facebook CEO Mark Zuckerberg delivers the keynote address at the 2017 Facebook’s F8 Developer Conference
Update: Facebook announced on Friday it is abandoning plans to reclassify its shares, stating “withdrawing the reclassification was in the best interests of Facebook and its shareholders.” Read more here.
Facebook on Friday settled a lawsuit over issuing reclassified shares that some investors argued would decrease the value of their investment.
The class action shareholder lawsuit was intended to block Facebook from issuing reclassified C shares, which some investors argued could cause shares to lose billions of dollars of value when they were traded. The new C shares would be publicly listed but come with no voting rights.
The new classification allows Facebook CEO Mark Zuckerberg to keep voting control of the company, even if he decided to lower his total ownership stake. The lawsuit said the new structure means that Zuckerberg could own as little as 2 percent of the company and still keep voting control.
In a note on Facebook in April 2016, Zuckerberg wrote the plan was created in order to allow him and his wife Priscilla Chan to donate money to solving global issues like curing diseases, improving education and climate change. It would also still allow him to stay “committed” to improving and leading Facebook, including helping the company grow internet access around the world, improve its artificial intelligence and develop virtual and augmented reality.
The trial was scheduled to begin September 22, and Zuckerberg was scheduled to take the stand. The settlement terms were not revealed.
Other people who were expected to testify include Facebook board members Marc Andreessen, CEO of the Bill & Melinda Gates Foundation Susan Desmond-Hellmann, and former White House chief of staff Erskine Bowles.