Facebook to Remain 'Private' in a Key Way

A lot of attention has been paid, to say the least, to Facebook’s long-awaited public stock offering, which could put a valuation as high as $100 billion on the company. For the first time, the average investor will get a chance to own a piece of the massive social network and its multibillion dollar revenue stream. In an important way, though, Facebook will remain a private company. Why? Because it is controlled by Chief Executive Officer Mark Zuckerberg through a special class of stock that gives him super voting rights. He also controls the board. In other words, you may own stock in the company, but you will have virtually no say in what will happen to it.

As described in the Facebook prospectus, new shareholders in the company, once it is publicly traded, will get class A shares that each carry a single vote. Zuckerberg and early investors own class B shares that each hold 10 votes. The co-founder and CEO has about 28 percent of this class of stock but also has voting agreements with a number of other Facebook insiders and co-founders that give him control of about 57 percent of the votes in the company.