Under investor pressure, Facebook is squashing a proposed ownership structure that would allow CEO Mark Zuckerberg to retain voting control of the company — even as he sold millions of his shares of company stock.

Last year, some shareholders filed a class action lawsuit to block Facebook from issuing reclassified C shares, which would allow Zuckerberg to maintain voting control of the company even as he sold off most of his shares to support philanthropic causes.

The proposed C shares would be publicly listed but come with no voting rights. Investors argued that the proposed ownership structure could cause them to lose billions of dollars of value when the shares traded.

"Facebook's board determined that withdrawing the reclassification was in the best interests of Facebook and its shareholders," a spokesperson told CNBC via email.

Zuckerberg said in a post on Facebook that the company's stock has performed better than expected, making it unnecessary for the company issue reclassified shares.

"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," he wrote. "As a result, I've asked our board to withdraw the proposal to reclassify our stock -- and the board has agreed." He also said that he would sell between 35 million and 75 million shares in the company over the next 18 months to support philanthropic efforts.

It was reported earlier that Facebook had settled the lawsuit, but the company announced it will abandon the plan instead.

"We are gratified that Facebook and Mr. Zuckerberg have agreed not to proceed with the reclassification we were challenging," Lee Rudy, partner at Kessler Topaz Meltzer & Check LLP which was representing the shareholders, said in a statement. "This result is a full victory for Facebook's stockholders, and achieved everything we could have hoped to obtain by winning a permanent injunction at trial."