There was never doubt that Mark Zuckerberg wouldn't make a ton of money after his company went public, but he's doing a particularly good job guaranteeing himself power at a post IPO-ed Facebook. Once reluctant to go public, the Facebook founder has decided to solve this problem by maintaining as much dominance of the social network as possible. Not satisfied with his 28.2 percent share in the company, Zuckerberg has negotiated himself majority voting power over Class B shares, updated IPO documents reveal, according to The Wall Street Journal's Shira Ovide.
To get this power, Zuck made some impressive deals. For the unbelievably low price of $100, Zuckerberg got certain shareholders to buy into voting agreements for Class B shares, which give investors 10 votes to Class A shareholders 1 vote. Here's the important nugget in the filing, from The New York Times DealBook's Evelyn Rusli: "This agreement is being entered into in exchange for a payment of $100 in cash from the Proxyholder to Stockholder and for other good and valuable consideration, the sufficiency of which is hereby acknowledged and agreed."
He now has some sort of control over 57.1 percent of those Class B Shares. Given the structure of Facebook's shares, having power over those type of shares will ensure Zuckerberg maintains control over well over half of the company. And, as DealBook's Steven M. Davidoff notes, that power will likely grow over time:
Facebook’s organizing documents dictate that when Class B shares are transferred, they typically will convert into the low-vote Class A shares. It is likely that, over time, Mr. Zuckerberg will hold onto the bulk of his Class B shares as other holders of Class B shares sell off their stakes.
Mr. Zuckerberg can also sell down his shares. But until the Class B shares comprise less than 9.1 percent of the outstanding Facebook shares, the holders of the Class B shares control Facebook.
Given this low threshold, Mr. Zuckerberg, 27, is likely to have enough Class B shares to give him control of the company for a long, long time, despite the fact that he will have a much smaller economic stake.
Though Zuckerberg's moves indicate he cares more about power than money, that "much smaller economic stake" isn't all that tiny. The fresh docs have also disclosed Zuckerberg will get a 45 percent annual bonus, which Ovid estimates would amount to $225,00 this year, based on his annual salary of $500,000. After that, he has said he will take the Steve Jobs route, opting for the $1-per-year salary. But, we imagine with all those valuable shares, that won't matter too much.
Zuckerberg's not the only one profiting, by the way. As expected, COO Sheryl Sandberg will get a hefty sum, with the filing showing she will get a $135,000 bonus based on an annual salary of $300,000.
This article is from the archive of our partner The Wire.
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