5 ms·
This is a proposed 3:1 stock split which would take the per-share price for Facebook down to the $30s and also give Zuck the ability to donate 2/3rds of his res
by aston 10y ago
This is a proposed 3:1 stock split which would take the per-share price for Facebook down to the $30s and also give Zuck the ability to donate 2/3rds of his resulting shares without any change to his percentage control of the company.
- dahdum 10y agoSeems ideal if you assume he wouldn't donate his shares if he couldn't retain control.
- deleted 10y ago[deleted]
- zhoutong 10y agoIt gives every shareholder the ability to sell 2/3 of shares without any change to their percentage control of the company.
- hnd00d 10y agoBoth of you are wrong... Let's say there are 100 shares, John owns 25 and Mark owns 75. Stock splits 3:1, there are now 300 shares, John owns 75 and Mark owns 225. 2/3 of 225 is 150, if Mark sold 2/3 of that he would not retain his percentage. Instead what is happening is a new class of stock will be created that is valued differently and has different voting rights.
- deleted 10y ago[deleted]
- adevine 10y agoActually, you are wrong. FB is doing a 3-1 stock split, but the newly issued shares don't have voting rights. So, in your case, Mark would own 225 shares, but only 75 of those would have voting rights, and 150 would be non-voting. Thus, he could sell the 150 non-voting shares and still retain the same percentage of voting control despite only having 1/3 of the "income" rights.
- kgwgk 10y ago"Income" that won't be distributed as dividend until he decides so. When he needs some cash he might prefer to increase the CEO compensation package instead. Why share the profits with the rest of the owners?
- adevine 10y agoA couple reasons: 1. Legally, Zuckerberg still bears fiduciary responsibility for all shareholders. If he decided to pay himself all the profits as CEO, he would get sued, and lose. 2. Almost all of Zuckerberg's wealth is tied up in his FB shares. If he starts acting in a way such that other investors don't believe he will support their interests, the value of those shares will go down. It would hurt Zuckerberg a lot more than anyone else.
- kgwgk 10y agoHe can't give himself all the profits, but he can easily raise his compensation from $5mn to $50mn without raising an eyebrow. He can also untie his wealth from fb shares while keeping control, as we have seen. (Actually it seems the $5mn are security expenses and use of corporate planes... It seems he doesn't really get any compensation beyond the $1 salary? Poor boy...)
- deleted 10y ago[deleted]
- omalleyt 10y agoWell, no each shareholder would get 3 stocks for every one they have now. But each stock would represent 1/3 of the stake in the company it used to. Sorry for a purely negative comment, just wanted to clarify. If you think about it, if every shareholder could sell, make money, and retain the same percentage ownership, someone on the other end of the deal is paying something for nothing.
- jsmthrowaway 10y agoEr, that's not how splits work. After the 3:1 split you have described, he would still own exactly the same percentage of Facebook, and any sale would change his percentage of control. Extra ownership is not created from thin air in a split. It's exactly the same proportion of ownership as before, there are just more (quantity of) shares. Two-thirds of post-split shares is identical in value to two-thirds of pre-split shares. To be clear I'm responding to what you've described, which is not what I understand the announcement to propose (it instead proposes a new voting class).