The social network’s board withdrew a stock reclassification proposal after a shareholder suit that would have put Mr. Zuckerberg in a courtroom.
SAN FRANCISCO — Facebook said Friday that it would drop a proposed reclassification of its stock that would have solidified Mark Zuckerberg’s control over the social network, in a victory for shareholders in a class-action lawsuit against the social giant.
The reclassification was proposed last year as a way to preserve the voting power of Mr. Zuckerberg, the chief executive, at Facebook, even as he gave away the majority of his stock for charitable purposes. But the move incited a shareholder suit that would have put Mr. Zuckerberg in a Delaware courtroom next week to testify on the matter.
By dropping the reclassification move, Facebook sidestepped Mr. Zuckerberg’s appearance in court at a time when the company is facing criticism on several fronts. Facebook is turning over more than 3,000 Russia-linked digital advertisements to Congress after questions over the company’s role in the 2016 presidential election. The social network has also been scrutinized recently over ads that could have been used to target racists.
“We’re thrilled that Facebook has dropped the reclassification,” said Stuart Grant, a partner at the law firm Grant & Eisenhofer, who represented institutional Facebook investors in the lawsuit. “Today’s move is a total victory for stockholders.”
Facebook said the board had “determined that withdrawing the reclassification was in the best interests of Facebook and its shareholders.”
The decision to drop the stock reclassification bucks a trend for technology chief executives who have structured their stock to gain outsize control over their company, often at the cost of common shareholder input. Larry Page and Sergey Brin, who founded Google, and Evan Spiegel and Bobby Murphy of Snap are among those who hold a disproportionate share of voting power over their companies.
The impetus for the stock reclassification came after Mr. Zuckerberg and Dr. Priscilla Chan, his wife, celebrated the birth of their first daughter, Maxima. The couple used the occasion to found the Chan Zuckerberg Initiative, a limited liability company that acts as the main vehicle for the couple to give away their wealth over the coming years.
“The idea was that it would allow me to keep voting control of Facebook so we can continue to build for the long term, but also allow Priscilla and me to fund the work we’re doing through the Chan Zuckerberg Initiative,” Mr. Zuckerberg said in a statement posted on his personal Facebook page on Friday.
“At the time, I felt that this reclassification was the best way to do both of these things,” he said. “In fact, I thought it was the only way. But I also knew it was going to be complicated and it wasn’t a perfect solution.”
Mr. Zuckerberg and a spokeswoman for the Chan Zuckerberg Initiative said the stock reclassification was no longer necessary. The chief executive noted that because of Facebook’s strong stock performance, “I can fully fund our philanthropy and retain voting control of Facebook for 20 years or more.”
He said he planned to sell 35 million to 75 million shares over the next 18 months to finance work in fields like education and science.
“This path offers a way to do all of this, and I’m looking forward to making more progress together,” Mr. Zuckerberg said.
