Understanding Mark Zuckerberg's Shareholding in Facebook

When analyzing the shareholding structures of Facebook, one cannot help but focus on the unique arrangement that enables Mark Zuckerberg to wield significant control over the company. Despite holding a minority position in terms of fully diluted total shares outstanding, Zuckerberg retains a majority of the voting shares. This intricate governance structure has led to both praise and skepticism in the financial community.

The Shareholding Structure

Upon the public offering of Facebook, the company adopted a specific share structure that allocated more voting power to its founders and early investors while maintaining liquidity for other shareholders through the Class A shares.

Class A and Class B Shares

Facebook lists its Class A shares on the NASDAQ, with each share carrying one vote. In contrast, Class B shares, which are not publicly traded, have ten votes per share. As of June 30, 2020, 2.879 billion Class A shares were listed, whereas the exact number of Class B shares is not publicly disclosed, but it is known that Mark Zuckerberg owns approximately 57.9% of the Class B shares. Additionally, around 12.5% of the Class B shares are held by close friends and allies.

Mark Zuckerberg's Holdings

Mark Zuckerberg personally owns approximately 410 million shares, which represent about 57% of the votes. Given that some of these shares have 10 votes per share, Zuckerberg's control is even more significant. According to available data, Zuckerberg's stake is valued at approximately $105 billion, as of September 11, 2020.

Intellectual Property and Corporate Governance

The unique shareholding structure has been a key factor in Zuckerberg's ability to defend Facebook against intellectual property disputes and fend off potential buyout offers from big players like Viacom, Yahoo!, and others. At 27, Zuckerberg's active management and strategic decisions have helped to maintain Facebook's value and stand against potential hostile takeovers.

Financial Performance and Rankings

Facebook's performance has been strong, outperforming the market, which has contributed to Zuckerberg's wealth. According to CNBC, as of the latest reports, Zuckerberg still owns over 375 million Facebook shares, valued at over $68 billion, making him the fifth-richest person in the world, following Jeff Bezos, Bill Gates, Bernard Arnault, and Warren Buffett.

Conclusion

The interplay between voting shares, Class A and Class B shares, and Zuckerberg's personal holdings gives him a significant governance advantage. This unique arrangement allows him to guide the company's direction while minimizing the influence of external investors on its management decisions. While the structure may be controversial, it has proven effective in maintaining Facebook's strategic direction and market success.