When Is the Facebook Stock Split Vote?
Mark your calendars, Facebook shareholders: Your date to vote for the proposed Facebook stock split will be here soon.
In a regular filing on April 27, Facebook Inc. (Nasdaq: FB) announced plans for a 3-for-1 split.
The mainstream media won't discuss the vote for the Facebook stock split until closer to the actual vote date, which is June 20. But Money Morning wants to make sure our readers are ahead of the curve and know what to expect now. Today, we are going to discuss why Facebook CEO Mark Zuckerberg wants a Facebook stock split. Plus, we will look at whether or not you should add FB stock to your portfolio before the official Facebook stock split date.
Here's Why CEO Mark Zuckerberg Wants a Facebook Stock Split
This share structuring that Facebook will use has come to be known as "a founder-led approach," which helps founders and CEOs retain control of their companies. Google, now Alphabet Inc. (Nasdaq: GOOGL, GOOG), offered a similar split in 2014.
Keeping company control is an issue for Zuckerberg because of what he plans to do with most of his shares…
Zuckerberg and his wife, Priscilla Chan, plan to give 99% of their FB stock to their philanthropic endeavor, the Chan Zuckerberg Initiative (CZI).
In a public letter to his daughter Max on Dec. 1, Zuckerberg stated he felt a responsibility to leave the world a better place for his daughter and his grandchildren. The 32-year-old CEO will donate roughly $45 billion in Facebook stock to CZI to:
- Join people across the world
- Advance human potential
- Promote equality for all children
While the gift is generous, there is one major problem if Zuckerberg donates all his stock away right now: He will lose his voting power.
Here's how this proposed Facebook stock split solves that…
Zuckerberg's Facebook Stock Split Solution
Facebook currently offers Class A shares and Class B shares. The typical investor owns Class A shares. Class A common stock entitles an investor to one vote for each share.
Facebook Class B stock carries much more power, as Class B owners are entitled to 10 votes per share.
Facebook stated on March 31 that Class A Facebook shares totaled 2 billion, and Class B Facebook shares were at 548 million.
On April 28, the Los Angeles Times reported Zuckerberg owns 4 million Class A shares and 468 million Class B. That gives Zuckerberg 60% of the voting power.
In order to keep that voting power, Zuckerberg will offer two shares of Class C stock for every one Class A and Class B share investors own. But Class C shares will not come with voting power.
This allows Zuckerberg to maintain control.
So how does this affect those who own Facebook stock?
If Facebook was mismanaged, investors should be concerned. But since its May 2012 IPO offering of $38 per share, Zuckerberg's leadership has propelled the Facebook stock price to climb 212% to $118.