Is Facebook's dual-class stock structure—which essentially secures CEO Mark Zuckerberg's control of the company—good or bad for investors?
That will be the top question as Facebook kicks off its annual shareholder meeting on Thursday in Santa Clara, California.
According SEC filings, Zuckerberg, his co-founders and early investors control about 74 percent of the voting power, through ownership of Class B stock, which gives them 10 votes per share. Shareholders who bought stock in the IPO were issued Class A stock, with just one vote per share. Zuckerberg personally controls about 55 percent of the voting power through his ownership of 422 million class B shares and voting agreements with other shareholders.
A proposal brought by activist shareholder Northstar Asset Management seeks to change this arrangement. "What we're asking for is for Facebook to recapitalize the shares so that each share gets one vote," Northstar Asset Management founder and CEO Julie Goodridge told CNBC.
Northstar has $250 million under management and bought Facebook shares at the IPO. It owns about 56,000 Facebook shares, worth just under $5 million. "I am convinced that shareholders need to be able to have some sort of a say in terms of appropriate corporate governance, especially auditors, who's sitting on the board and other issues around sustainability and you know, electioneering contributions, that sort of thing," said Goodridge. Northstar has also filed a similar shareholder proposal with Google, which has three classes of shares.