Powerless Facebook Investors Voted Overwhelmingly To Oust Zuckerberg As Chairman (businessinsider.com) 158
"The Facebook shareholder revolt just got bloody," reports Business Insider:
It's now clear that independent Facebook investors voted overwhelmingly in support of proposals last week to fire Mark Zuckerberg as chairman and scrap the firm's share structure. According to the results of votes at Facebook's annual shareholder meeting, 68% of outside investors want the company to hire an independent chairman. The majority was up from 51% last year.
Despite the revolt, the proposals did not pass because of Zuckerberg's voting control of the stock, which means he can swat away shareholder demands. "Arrogance is not a substitute for good corporate governance," Michael Connor, who helped coordinate action among activist Facebook investors, said.
"Facebook's voting rights are tilted heavily in favor of B-class shareholders, which consist almost exclusively of Zuckerberg and his small coterie," explains Slashdot reader schwit1. "Which means that the company's founder enjoys all the cash from being publicly-held, but none of the discipline from shareholders."
Facebook's investors are now demanding an independent investigation into Zuckerberg's "outsized" power, according to the article, which notes that 83.2% of outside shareholders also backed a proposal to scrap Facebook's dual-class share structure altogether.
Despite the revolt, the proposals did not pass because of Zuckerberg's voting control of the stock, which means he can swat away shareholder demands. "Arrogance is not a substitute for good corporate governance," Michael Connor, who helped coordinate action among activist Facebook investors, said.
"Facebook's voting rights are tilted heavily in favor of B-class shareholders, which consist almost exclusively of Zuckerberg and his small coterie," explains Slashdot reader schwit1. "Which means that the company's founder enjoys all the cash from being publicly-held, but none of the discipline from shareholders."
Facebook's investors are now demanding an independent investigation into Zuckerberg's "outsized" power, according to the article, which notes that 83.2% of outside shareholders also backed a proposal to scrap Facebook's dual-class share structure altogether.
Don't like the governance model (Score:5, Insightful)
Don't buy the shares. How difficult is that?
I would think that the lack of representation would be figured into the share price, reducing its value appropriately.
Re:Don't like the governance model (Score:5, Funny)
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Re: Don't like the governance model (Score:4, Informative)
Facebook listens to over 51% of shareholders. Specifically Zuckerberg's 51% control and whoever else that didnt vote to oust.
Facebook's data handling should be criminal. But fuck the shareholders that bought into a minority interest and want to run it all.
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There must be some real huge retards bought the rest of that stock and were expecting their share to have the same voting power as one of Lt. Cuckerberg's shares.
Poor stupid pathetic losers.
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The complaint isn't that a minority can't control it. It is that the majority can be ignored and out voted. You literally could buy the 80%+ of the company he doesn't own and you would have less voting power than Zuckerberg as his B class shares are worth 10 votes to every 1 of your A class shares and he owns 80% of the B class shares which cannot be purchased on the market. basically he is a minority shareholder with absolute power.
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I'm not sure why super-voting-shares exist.
Certainly, if the lack of representation is factored into the share price, so is the possibility that a lawsuit will equalize the power.
And, even if you hold few voting rights, you still have rights / obligations owed by the company. You still can sue if those are violated.
Re: Don't like the governance model (Score:3)
A lawsuit on what grounds? The FB operating agreement is available for any potential investor to read? "Your honor, we just don't like how he set up his company to retain control. We knew how he set it up when we invested. Do us a favor and change it, will you?"
Good one
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What grounds? Management's quasi-criminal, unethical behavior is destroying the long-term value of our stock.
Which is their perfect right as owners of controlling interest. The GP is right. If you don't like share structures that preclude common stock holders from control, the remedy is very simple. Don't buy the shares. The investors knew or should have known what they were buying from the get go. It's all spelled out in the SEC filings that Facebook, like any public corporation, must file by law. I for one refuse to invest in companies where ownership of 51% of the common stock doesn't equal control of the compa
Re: Don't like the governance model (Score:1)
Nope, that's not their right. In U.S. law, the board is responsible to all shareholders, not the majority owners. That is why minority shareholder suits exist.
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Well, the lawsuit could go a lot of ways. "The original operating agreement that set up the multiple classes of shares was always illegal and that part should be stricken". "The actions of Zuckerburg with his power has been exercised to benefit him and hurt shareholders, so his power should be normalized". "It was unforeseeable because of statements X, Y, Z that Zuckerburg would retain such a large voting block when he promised to divest." "Some technicality in the agreement no one bothered to find befo
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A lawsuit on what grounds? The FB operating agreement is available for any potential investor
An operating agreement doesn't override fundamental shareholder rights.
They can make the allegation that Zuck failed in his fiduciary responsibilities to the shareholders and pursue a court order to ameliorate their grievances -- for example, compel the organization by court order to modify the membership of the board such as by requiring a majority of independent directors elected by the common shareholders or
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A lawsuit on what grounds? "Your honor, we just don't like how he set up his company to retain control. We knew how he set it up when we invested. Do us a favor and change it, will you?"
An illegal contract isn't enforcable. Zuckerberg wants to benefit from Facebook being a publicly traded company, and there are laws around being a publicly traded company. I don't know if his current share structure or investment agreements breaks any laws, but if they do then it doesn't matter what investors agreed to because the contracts would be void.
Now I'd think that Zuckerberg would have had his lawyers make sure the company and shares structure was all legally airtight, but the premise of the lawsui
Re: Don't like the governance model (Score:2)
They exist so that you can have vested leadership who doesn't have to make decisions based on the vagaries of the market. Obviously, there are downsides, but sometimes a competent dictator is better than a dissonant council.
Re: Don't like the governance model (Score:2)
In Facebook's case, that's exactly how it was meant to be, and everyone bought into that idea.
Re:Don't like the governance model (Score:5, Insightful)
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what are you blathering about?
five years ago facebook was $50 a share, now it's over $150
the "shareholders" have nothing to complain about. the one with the majority of stock gets the votes, that's how it works.
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Except that it's not how it works. Zuckerberg has jiggered the stock classes so that he gets the majority of the votes despite only having a small fraction of the stock.
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Small fraction??? He owns 80% of the class B shares, 400 million of them, so yes he rightfully gets to be the god and that is how it works. He started the business, so he gets to do that. It's right.
Sure, Facebook is bad for privacy violations etc etc etc... but, there is no disputing he has the right to be the big poobah of facebook
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Yes, the 15% that include the founder and owner should control everything. The man that started a multi-billion dollar business in his dorm room gets that right. Get it through your obtuse skull, it's right and proper.
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Y'know, there was a guy upstream who said " the one with the majority of stock gets the votes". I think he had a point.
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That 400 million B class shares gives him 15% of the company. You believe 15% should be able to overrule the other 85%? which is in effect right now, 100% of the rest of the company can vote against him and he still gets to override them.
In case you don't understand how agreements work: yes, that is exactly the case. The 85% purchased their share-without-a-vote stock without a gun to their head, hoping to get a good return on their investment. They knew beforehand that they would not have voting rights.
So yes, The Zuck gets to be dictator when it comes to Facebook. If anything, that should give you more reasons to divest from it, and also to just delete your profile. I don't own any FB stock and I haven't logged in in years. If they would
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You are the idiot. that's normal. Those who bought the stock two or more years ago and held it made money, what more do they need? Nothing more, that's what.
You seem to think every one with a few hundred bucks should get a say in how a multi billion dollar corp is run. no they don't, no one cares what you think nor do we want you running any business. Leave it to the pros with proven track record
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facebook doesn't give a shit about its shareholders (except for a small few)
That is not how shareholders work. You either give a shit about them (maximise their value) or you don't (don't maximise their value) you don't get to care about only a subset since there is only a single aligning goal and the results are divided among the issued shares.
I would argue Facebook care's deeply about shareholders. Specifically they have a shareholder who stands to loose many billions of dollars if things don't go right, and that share holder just happens to think the Zuck is ideal to run the com
Zuckerberg definitely cares about Zuckerberg (Score:5, Interesting)
> That is not how shareholders work. You either give a shit about them (maximise their value) or you don't (don't maximise their value) you don't get to care about only a subset since there is only a single aligning goal and the results are divided among the issued shares.
It's entirely possible, too common, and definitely illegal for the executives take actions which benefit those executives rather than shareholders. The fact that those executives also own a special class of stock doesn't prevent that.
Replacing the CEO would be good for shareholders (according to most stockholders), it wouldn't be what Zuckerberg wants for himself. One can reasonably argue that Zuck is putting his personal benefit or preference above the interests of stockholders. If a shareholder prove that Zuckerberg knows he isn't thr best choice for CEO, that would prove his actions are unlawful.
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It's entirely possible, too common, and definitely illegal for the executives take actions which benefit those executives rather than shareholders.
No it's not illegal in the slightest. But that's entirely irrelevant to my post since my fundamental point was that in this case the executives *are* the biggest shareholders and the most exposed to any financial problems a falling share price would have.
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> No it's not illegal in the slightest.
Google "fiduciary duty corporation".
Have a great day!
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The reason why you are wrong is that you have not presented terms or facts that would constitute a breach of fiduciary duty. Taking an action that benefits executives *rather than* shareholders does not necessarily violate a fiduciary duty because this is no where near precise enough. An action that solely acts to benefit executives, and not serve the interests of the corporation is usually a breach of fiduciary duty (e.g. having the corporation purchase an executive's vacation home, which is only for that
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You're also the type of asshole who says if you don't like your [city|state|country|company] you should leave.
No. If you don't like the way things are you should seek to change them from within. That's the beauty of America. And the responsibility of being a citizen, corporate or otherwise..
Be the change you wish to see in the world.
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Don't buy the shares. How difficult is that?
Exactly.
When Facebook went public, Mark Zuckerberg gave himself a special class of shares where he gets 10 votes to your one. It shouldn't be allowed, but it is, and you knew that (or should have known) when you bought your Facebook stock, so you really have no one to blame but yourself.
All companies do everything they can to rig things so that shareholders have no say in how the company is run. Facebook just happens to be a little more blatantly evil than most in that respect.
The bottom line here is very
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>"Don't buy the shares. How difficult is that?'"
I was going to post the exact same thing. If you don't want to own Facebook, then don't buy it or sell and get out now. They certainly weren't complaining when their stock prices were rising in huge ways for many years.
The owners take the overwhelming majority risk of business failure (or rewards in its success). So they need to stop whining. Welcome to the free market. Go make a new competitor- Lord knows we need one in the space.
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Not only that, but it makes sense for zuckerberg not to give the shareholders too much power... He understands the business having built it, shareholders are far less likely to and in many cases shareholders are only concerned with short term profits and not the long term viability of a business, going public can often destroy companies.
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"Stop whining, don't try to make things better! Just leave if you don't like it, why should you get to have any influence over the thing you partly own?!"
You knew what you were getting into. (Score:5, Insightful)
You knew what you were getting into.
If you buy non voting class stock, you don't get a powerful vote. Whining is irrelevant.
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This, it's not like it was a secret or anything. I did wonder at the time what kind of stupid bastard would fall for it, and the answer appears to be the particularly stupid kind. FOMO?
Zuckerberg's "outsized" power (Score:1)
Do you know where Zuckerberg got his "outsized power"?
From every single person who ever signed up for Facebook.
If you make someone else your master, do not complain when the master you said you wanted pulls the strings in ways you do not like.
We had an open internet, and you fuckwits decided you'd rather put Zuckerberg in the middle of everything you ever do, say, see, read, everywhere you go, all your friends, who gets to say what to who, who must send in their photo ID to avoid losing touch with their fri
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Eh. Facebook is irrelevant. People who don't like Facebook are free not to have Facebook accounts and not buy Facebook stock. If you are worried about control (and death of open Internet), companies to worry about are Google and Amazon---much of the Internet now runs on their cloud services, and they have actual power to affect people who don't directly do business with them.
I only thank God almighty that neither of those companies are as openly evil as Facebook.
I like Bernie Sanders' idea (Score:5, Interesting)
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It works for the Mondragon Corporation. The entire multi billion dollar company is comprised of employees with a stake in the company
https://en.wikipedia.org/wiki/Mondragon_Corporation
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Feel free to start one just don't steal one.
Re:I like Bernie Sanders' idea (Score:5, Interesting)
It works well in Germany. Although I think a corporate charter may be too low a bar. I'd be fine with any company more than ~50 employees being the cutoff. Something more than a small shop.
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if you want a corporate charter then you have to let employees on the board of directors.
chairman and chief executive officer positions at Facebook Inc, both held by co-founder Mark Zuckerberg, link [cnbc.com]
Perhaps pedantic, but isn't Zuckerberg an employee of Facebook?
(I know what you meant, but I'm responding to what you said.)
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How about: If you want a cooperative start your own fucking company you thief!?
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Excellent. I propose we have the everyone else class, and underneath, the roman_mir class. The latter shall be confined to menial jobs at minimum wage without regard to personal merit.
Yeah (Score:1)
30,000 Americans will die to treatable illness this year and next and 500,000 sleep outdoors, so we're a long way off from that pretty low bar.
Good (Score:5, Insightful)
Unless the company is expressly designed to be guided and managed by shareholder vote, shareholders are just along for the ride. They can make suggestions, but they should never get to steer -- that privilege is reserved to the founders and domain experts. If you don't like where we're going, sell out and get off.
The reason I feel that way is because of the damage and destruction done to long-established companies in the name of pleasing "shareholders." Just Google for "hedge fund takeover" to get a quick lesson in what The Money will do if it gets control of your company.
And frankly, in Facebook's case, The Money is (as usual) trying to get off cheap. By ousting Zuckerberg, they can install some clueless dimwit to file off some of Facebook's sharper, more visibly harmful corners, thereby preserving the company's core privacy-harvestsing operations with a minimum of expense. The correct solution would be to create a viable competitor to Facebook. But that would be much more expensive.
So, yeah, Zuckerberg is a dick. But it's his vision and his company. Let his company -- and his "principles" -- live or die on their own merits.
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IT ceased being his company a while ago. It's a public company, with public representations and a lot of legal requirements that come with it. Didn't want to do that? He shouldn't have made all that money by going public. You can have the cash or be a closely held company.
And, even if it was his initial vision (which, obviously, it wasn't, because MySpace, Friendster, etc) that means jack shit. I mean, just because someone starts something doesn't
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Well, coming from a generation older, what say you about Bill Gates?
That bastard has a lot of goddam money. He has more than he can possibly spend.
His "philandering," efforts somehow work out to be profit ventures. He wants even more.
Personally, I deleted Facebook and that's all I need from them. Whatever else happens, it's not that I don't care; it's just that it doesn't matter.
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Bill Gates never had supershares. Zuckerburg does. Brin does. Those are bullshit.
How do I feel about Bill Gates? Jealous. But I feel like he always had a simple business proposition. "Fuck you, give me money." Compare that to FB/Google spying on everything, I'd rather just pay money.
But, it's not money, it's corporate governance and power. Gates controls ~1.3% of Microsoft's votes. Zuckerburg controls 68% of Facebook's.
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I have no problem with him.
Him doing great things doesn't make my life worse.
His ownership of companies worth a lot doesn't make my life worse.
And while he do have the funding and could spend a lot the amount of spending he do doesn't really influence me either. Sure his CO2 footprint is larger than mine but all in all it doesn't really affect me. Microsoft operations would affect me much more but if your argument is that Gates shouldn't own it but it should still exist then you could argue that wouldn't ch
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But what he has sold is part of the profits not so far the control of the company.
You just have to accept that.
When he sold those stocks he sold what he sold and they bought what they bought.
Just as getting hired to make a job doesn't make you a part owner of the company you was hired to work for. That wasn't the contract. You sold your time you didn't got ownership of the company.
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The reason I feel that way is because of the damage and destruction done to long-established companies in the name of pleasing "shareholders." Just Google for "hedge fund takeover" to get a quick lesson in what The Money will do if it gets control of your company.
And yet, there are many examples of copmanies mismanaged by their founders. Its also important to remember that the founders are selling part (in Zuckerbergs case most) of the company because it needs the money.
Voting with your feet^H^H^H^H wallet? (Score:2)
Unless they bought in July, 2018, at current prices, they can bank their profits,TTMAR*
Last one out the door, please turn off the lights!
If 40% / 60% / 80% of the disaffected shareholders choose to ditch their shares, let the stock crater, then sit back and watch the show, they can bank substantial capital gains and provide the only kind of motivation SuckerBorg responds to. Big stick, no carrot.
*(T)ake (T)he (M)oney (A)nd (R)un
Oh my (Score:2)
"Which means that the company's founder enjoys all the cash from being publicly-held, but none of the discipline from shareholders."
Oh, I'm sure that's just a happy side-effect of his corporate structure that no one expected or engineered. I bet ol' Mark was as shocked as anyone to find out that this is the way it works.
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He isn't a majority shareholder. It's just that the stock was engineered such that different classes carry more or less voting power. He has a majority of the vote but far from a majority of the stock.
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many companies have multiple stock classes.
class A common 1 vote per share
class B 10 votes per share
preferred stock (no vote at all, but are payed out early when the company liquidates).
Re: Absolutely retarded (Score:1)
An early entrant has held onto their position and elbowed their way around to maintain dominance. There are no natural laws of competition that put FB on top.
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and has not shown any major flaws in leadership
Man have you not been paying attention!
Discipline? (Score:2)
I would imagine having a controlling stock in the company with a market cap of $494bn is "discipline" enough. Companies exist to make money for shareholders. Shareholders vote via democracy in much the same way as the electoral college means not every individual person's vote counts the same. That doesn't mean share holders aren't aligned to a common goal of making more money.
This is nothing more than a bunch of people on the losing side of any democracy complaining about the policies of the winner. Sucks t
Zuckerberg doesn't care (Score:2)
Because all you peoples who bought into FB stock made the man extremely wealthy.
If he left today, he's pretty much set for the rest of his life x 1000.
Do you really think he loses sleep over this ?
Why doesn't he just quit? (Score:1)
There is nothing new about stock classes (Score:3)
The whining we're hearing is from activist investors. They buy their way into companies and then start proposing resolutions for voting at the company meetings. They're mad because their techniques won't work with Facebook. Again, BFD.
Anyone that invests in stocks is expected to do their own due diligence. Anyone investing now knows what the ownership structure looks like. If you want a mediocre stock that is $20 lower today than this date last year and doesn't give any institutional control to shareholders, by all means invest. If you're already invested and just learned about this structure, for one shame on you do some goddamn research next time. For two, feel free to sell your shares on the open market. Someone will buy.
Zuckerburg is an asshole. He's also probably smarter than you.
As others have said: don't like it? Don't buy it. (Score:2)
I despise the Zucc and all that Facebook stands for and wish it would die a fiery, painful death by a thousand cuts.
That being said, he's one smart/arrogant person and had the right advisors when he took the company public to orchestrate it the way he did where he always had the votes to prevent things like this.
Too bad, so sad for the non-voting shareholders.