Mark Zuckerberg.GettyFacebook has dropped its plan to create a class of non-voting shares in the face of a class action lawsuit brought by investors.
The decision means that Facebook CEO Mark Zuckerberg and other Facebook insiders will not take the witness stand in the closely-watched trial.
“We're thrilled that Facebook has dropped the reclassification,” a representative for shareholders in the case told Business Insider in a statement Friday. “Stopping the issuance of the non-voting C shares is all the relief we were asking for at trial. Today’s move is a total victory for stockholders.”Facebook and a representative for shareholders in the case didn't immediately respond to requests for comment.
Zuckerberg was scheduled to publicly testify in Delaware Chancery Court on Tuesday, September 26, marking the 33-year-old Facebook founder's second-ever public court appearance. Other Facebook board members, including Marc Andreessen and Erskine Bowles, were expected to testify in October.
Facebook didn't immediately respond to requests for comment.
Originally filed in April 2016, the class action lawsuit sought to block Zuckerberg's plan to reclassify Facebook's stock structure and create a new class of non-voting shares. The proposed issuing of non-voting, Class-C shares would concentrate Zuckerberg's majority voting rights even as he sells his holdings over time to fund his philanthropic efforts.
Last December, the lawsuit's discovery process surfaced controversial text messages between Zuckerberg and Facebook board member Marc Andreessen, who the plaintiffs have accused of surreptitiously coaching Zuckerberg through a negotiation process with a special committee to win board approval for the stock change.
Another revelation from the discovery process was that Zuckerberg has seriously considered holding some form of public office. Facebook's reclassification proposal included a clause that would let Zuckerberg serve indefinitely in public office while still maintaining control of the company.
Facebook's decision to settle on the eve of trial follows in the footsteps of Google, which settled a similar lawsuit in 2013 over its plan to issue non-voting shares so that cofounders Larry Page and Sergey Brin could maintain their majority voting rights.
This story is developing. Check back for updates.
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