We don’t build services to make money; we make money to build better services.
In Facebook’s IPO filing, Mark Zuckerberg outlined his vision for the Company, “Simply put: we don’t build services to make money; we make money to build better services. And we think this is a good way to build something.” To ensure his vision is carried out Zuckerberg included provisions which would ensure he maintained control of Facebook, even after it went public.
As of the IPO, Zuckerberg only owned 28.2% of the Company’s outstanding Class B shares, yet he maintains 59.6% of the shareholder voting power. He was able to maintain control through striking a deal with investors that allowed him to take Facebook public with adual-class share structure. Public investors purchased Class A shares, having one vote per share. However, Zuckerberg, employees, and investors prior to the IPO hold Class B shares, which are allowed 10 votes per share. Furthermore, Zuckerberg has entered into agreements with a number of Class B shareholders that gives him “irrevocable proxy” to control their votes.
The filing also stipulates that if and when Class B shares are sold they are automatically converted to Class A shares, allowing Zuckerberg to maintain control. In fact, owners of Class B shares will maintain control of Facebook until Class B shares constitute less than 9.1 percent of outstanding Facebook shares. Zuckerberg makes it clear in the filing that he plans to maintain control for the long-term, ensuring that his plan and vision for the Company is carried out.
Facebook’s unique structure highlights the importance and intricacies of a company’s capital structure and the rights of each class of stock. The importance of understanding and maintaining an appropriate structure is apparent in Facebook’s history from a small, college start-up to a multi-billion dollar corporation. Many companies today organize and track various ownership stakes through the use of cap table software, such as that released by Greener Equity, Inc.
Through its comprehensive industry experience and expertise, Greener Equity developed dynamic cap table management software that targets the needs of CEOs, CFOs, investors, lawyers, and venture capitalists. Users can rest assured that accuracy and a clear snapshot of their company’s cap table is maintained at all times through the use of the software.
Greener Equity offers the software at a flat annual fee of $500 per company, with significant discounts available for venture capital firms, investors, and law firms looking to manage multiple companies’ cap tables. For more information, please visit http://greenerequity.com,