Brattle contributes to shareholder victory in Facebook proposed reclassification

On September 21, 2017 Facebook’s board of directors voted to abandon the pending reclassification of the company’s common stock. The reclassification would have issued two shares of non-voting (Class C) stock to every share of regular (Class A) stock and high-voting (Class B) stock. A Brattle expert opined in reports and testified at deposition that academic studies found that the value of firms are lower when the disparity between their controlling shareholders voting power and equity interest (the “wedge”) is larger. He concluded that by increasing Zuckerberg’s wedge, the reclassification would have reduced the value of the Class A shares.