After Public Offering, Mark Zuckerberg Will Still Control More Than Half of Facebook

Facebook’s founder and CEO Mark Zuckerberg will retain control of the social network, even after completing its impending initial public offering.

According to documents filed with the Securities & Exchange Commission today, Facebook is seeking to sell 337.4 million shares at between $28 to $35 a share, valuing the company at up to $95 billion.

Zuckerberg, who plans to participate in the offering by selling 30.2 million shares, will continue to control 57.3 percent of the company’s voting power once completed.

The filing explained that the majority of Zuckerberg’s proceeds from the sale of his shares will be used to pay an enormous tax bill associated with exercising nearly 60 million shares.

In the filing, Facebook said it plans to offer 180 million shares of its Class A common stock and that selling shareholders are planning to offer 157.4 million shares. It will not receive any of the proceeds from selling shareholders.

The company estimates that it will likely net $5.6 billion from the offering if it achieves a mid-point price of $31.50 a share.

The 30.2 million shares Zuckerberg is selling could earn him more than $1 billion. His remaining shares would be worth roughly $17 billion.

Later in the document, Facebook explains that since Zuckerberg controls a majority of the shares, he will have the ability to control the outcome of matters submitted to shareholders for approval, including the election of directors and direction of the company.

Likewise, under Nasdaq rules, the company will not be required to have other common housekeeping functions, such as a certain number of independent directors on the board or a compensation committee.

Here’s a list of other shareholders and the number of shares they are planning to sell:

  • Accel Partners: 38.2 million shares
  • DST Global: 26.2 million
  • Goldman Sachs: 13.1 million
  • Elevation Partners: 4.6 million
  • Greylock Partners: 6.9 million
  • Mail.ru Group: 11.2 million
  • Zynga’s CEO Mark Pincus: 1 million
  • Meritech Capital: 6.9 million
  • Microsoft: 6.5 million
  • Reid Hoffman: 942,784
  • Sean Parker: None
  • Tiger Global Management: 3.3 million

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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik