Facebook CEO Mark Zuckerberg has received an overwhelmingly negative vote from its shareholders in response…
Facebook Investors Want Mark Zuckerberg Out, Share Structure Redone: The Full Story6th June 2019
After much debate and debacle, it has happened. Facebook CEO Mark Zuckerberg has received an overwhelmingly negative vote from its shareholders in response to questions rising about his chairmanship, policies and the general route in which the company has progressed. In this situation, any other chairman would have had to leave the respective company’s board, but not him.
The reason for this is the strategically arranged two-class shares issued by Facebook. The Class-B shares, held by Mark Zuckerberg and Facebook inside circle of board members, have weightage of 10 voting shares each. In comparison, the Class-A shares issued to the public and to Facebook’s majority shareholders, all count as one voting share. In essence, Zuckerberg has absolute power and authority over Facebook, and even when strongly voted against, he can simply pull in his weight and dismiss anything that displeases him.
It is perhaps telling that at the latest meeting, the net worth of shareholders that voted to oust Zuckerberg from his throne amounted to $3 billion in Facebook investments. It indeed is, for while Facebook may be a powerhouse today, no company is infallible, and opposing large value shareholders by showing complete disregard for the majority decision is never going to go well.
Zuckerberg is still only 35, but he leads a company that presently has a market capitalisation value of over half a trillion dollars. It is this, that raises his belief that nobody apart from he himself should be allowed to have control of a company that he created. It is a classic case, and one can be profoundly empathetic. But, we are no longer in the final year of college anymore, Facebook’s users aren’t just Zuckerberg’s classmates, and giving in to his whim is not just about bad pizza dinner on a sloppy Saturday night.
Facebook co-founder and Zuckerberg’s long-time friend, Chris Hughes, stated that the company must be broken up for its own sake, lest it spin out of control. Aaron Greenspan, who was Zuckerberg’s classmate at Harvard and has received undisclosed millions from him after winning a lawsuit, opines that it already has spun out of control, thanks to the chief exec’s stranglehold. So far, the company has been wrecked in data scandals. Soon, we might just be staring at a corporate meltdown.
Zuckerberg needs to realise that if he does pay attention to shareholder demands, it may be his key to long-term sustained dominance in the industry. By remaining at the head of operations and still holding a large chunk of Facebook’s shares, he can still retain his emphatic influence, while giving his investors the insurance that they are rightfully claiming.
One only hopes that before the 2020 Facebook AGM, the scales against Zuckerberg do not tip a full hundred.