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Facebook folds on stock reclassification

Illustration: Greg Ruben / Axios; Photo: Noah Berger / AP

Facebook on Friday said in a regulatory filing that it will no longer issue a new class of non-voting stock that had become the focus of a lawsuit that would have required Mark Zuckerberg to testify next Tuesday in a Delaware courtroom.

At issue: The new stock would have allowed Zuckerberg to maintain his majority voting rights at Facebook, despite selling existing shares to fund his philanthropic efforts. But the plan sparked a class action lawsuit, and was on hold pending an outcome.

Why it matters: Tuesday would have been only the second time that Zuckerberg testified in open court. And it would have come at a particularly fraught time, as he handles allegations that the Facebook platform was used by Russian operatives during the election.

Bottom line: Facebook blinked.

Going forward: Zuckerberg posted on Facebook shortly after the announcement, saying that the move will not affect the scope of his philanthropic intentions. He wrote, in part:

Over the past year and a half, Facebook's business has performed well and the value of our stock has grown to the point that I can fully fund our philanthropy and retain voting control of Facebook for 20 years or more. As a result, I've asked our board to withdraw the proposal to reclassify our stock -- and the board has agreed. I want to be clear: this doesn't change Priscilla and my plans to give away 99% of our Facebook shares during our lives. In fact, we now plan to accelerate our work and sell more of those shares sooner. I anticipate selling 35-75 million Facebook shares in the next 18 months to fund our work in education, science, and advocacy.
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