Facebook CEO to testify in November in investor suit

Bloomberg

Facebook Inc. co-founder Mark Zuckerberg has to explain in court why he dropped a plan to create non-voting shares, which would’ve allowed him to retain control of the world’s largest social-media company after selling most of his stake to fund charitable works.
Delaware Chancery Court Judge Travis Laster ordered Zuckerberg to testify on November 19 in a lawsuit brought by investors to recoup legal fees incurred in stopping the plan.
Zuckerberg abandoned the push for the new shares last year.
The investors’ lawyers are seeking $129 million from the company. Facebook officials say they only deserve $20 million.
Laster wants to hear from Zuckerberg to help him decide the value of investors’ efforts to oppose the new claims of shares.
Another group of investors sued Zuckerberg and other Facebook directors in the same court this week, saying board members should be held accountable of the chummy way they considered the founder’s request for the creation of non-voting shares.
“The reclassification proposal has been withdrawn,” Vanessa Chan, a Facebook spokeswoman, said. “The only issue still being litigated is compensation for plaintiffs’ lawyers, who are seeking the second-highest fee in the history of the court. We continue to oppose their efforts to recover a windfall at the expense of stockholders.”
The judge scheduled three consecutive days for Zuckerberg’s testimony in his September 6 order. The billionaire, who was scheduled to travel to Delaware last year to testify about the proposed non-voting class, scrapped those plans on the eve of trial.
“Over the past year and a half, Facebook’s business has performed well and the value of our stock has grown to the point that I can fully fund our philanthropy and retain voting control of Facebook for 20 years or more,’’ Zuckerberg said.
Facebook directors had approved the new class of shares and a majority of the company’s shareholders had backed the move before Zuckerberg decided to drop the effort.
Lawyers for investors say the key issue is how much value should be attached for Zuckerberg’s control of Facebook. Experts have valued his control as being worth as a minimum of $1.29 billion and a maximum of $5.2 billion according to court filings.