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Regardless of how the suit transpires, letting someone maintain control of a public company while divesting themselves of the risk associated with ownership str

Regardless of how the suit transpires, letting someone maintain control of a public company while divesting themselves of the risk associated with ownership strikes me as a bad idea.

sireat 10y ago
Unfortunately, this lack of regard for minority shareholders seems the norm these days. Google is a similar offender. Let's not even mention what happens when you buy Alibaba shares, whatever you own is not Alibaba. The problem arises when company starts going in a direction that most shareholders would object to. What can you do then? Let's say Zuck ends up owning 10 % of FB but still has the control of the voting shares. Zuck decides that FB should buy an island and attempt to breed dinosaurs at a cost of cool 50B, should not the other shareholders have any say in this? Seems ridiculous but what if instead of an island that 50B is spent on building some futuristic headquarters. Ok Apple is going along this path but as a shareholder you should have a say in major decisions. At least with a company like Oracle there is a possibility that Carl Icahn could raise enough money to put Larry in his place should Oracle start making boneheaded decisions. With FB you cannot do anything if you do not like the direction Mark is taking the company. As someone else posted, if you want to call the shots without being subjected to public scrutiny then own 51% of the company or do a private buyout like Dell did. Again the fault lies with the investors who are not averse to buying phantom claims since there is the next greater fool after them.
- kuschku 10y ago
  On the other hand, you can’t just give shareholders all the power – or you’ll just get corporate raiders, buying 51% of shares, doing a takeover, selling everything valuable, and destroying jobs. We’ve seen that so often in the past years in Germany, it’s completely ridiculous.
  - JamesBarney 10y ago
    If your tangible assets are worth more than your company, your company is doing it wrong. For the other side of this equation see Japan, and their zombie companies.
    - kuschku 10y ago
      Oh, it’s not profitable. The company usually ends up far in debt from selling off the assets, but the shareholders or the interim CEO they forced in aren’t responsible. A common scheme is buying control of a company when it’s in a crisis, selling off all assets and real estate, forcing them to rent the real estate again, then the company goes bankrupt, after having no assets left, and the shareholders made profit, and the company has to pay huge amounts of debt. It’s the usual way of destroying jobs.
      - princeb 10y ago
        > It’s the usual way of destroying jobs. unfortunately, if a company is trading below BV it means it's expected to destroy jobs on its own. better to put it out of its misery quickly than to allow it to run itself to the ground.
      - JamesBarney 10y ago
        Wait are you saying that the new shareholders take over a company, borrow a lot of money from a bank. Sell off it's assets. Pay all of it's new found cash out to it's shareholders through dividends. Then goes bankrupt, and screwing over the bank?
        kuschku 10y ago
        Well, kinda. Sometimes the government has to jump in to save the jobs, sometimes they just move the pension funds for the employees around and find a way to pay that out to the shareholders, etc.
iaw 10y ago
Normally I try to give the benefit of the doubt, when the plan was just to use the funds for the Chan Zuckerberg Initiative it was an acceptable decision to me as presumably Mark's desire for the CZI to succeed would mitigate his risk reduction. The larger issue to me is allowing Zuckerberg to maintain control while working in government, private and public sector interests shouldn't be comingled like that.

Regardless of how the suit transpires, letting someone maintain control of a public company while divesting themselves of the risk associated with ownership strikes me as a bad idea.

sireat 10y ago

Unfortunately, this lack of regard for minority shareholders seems the norm these days. Google is a similar offender. Let's not even mention what happens when you buy Alibaba shares, whatever you own is not Alibaba. The problem arises when company starts going in a direction that most shareholders would object to. What can you do then? Let's say Zuck ends up owning 10 % of FB but still has the control of the voting shares. Zuck decides that FB should buy an island and attempt to breed dinosaurs at a cost of cool 50B, should not the other shareholders have any say in this? Seems ridiculous but what if instead of an island that 50B is spent on building some futuristic headquarters. Ok Apple is going along this path but as a shareholder you should have a say in major decisions. At least with a company like Oracle there is a possibility that Carl Icahn could raise enough money to put Larry in his place should Oracle start making boneheaded decisions. With FB you cannot do anything if you do not like the direction Mark is taking the company. As someone else posted, if you want to call the shots without being subjected to public scrutiny then own 51% of the company or do a private buyout like Dell did. Again the fault lies with the investors who are not averse to buying phantom claims since there is the next greater fool after them.

kuschku 10y ago
On the other hand, you can’t just give shareholders all the power – or you’ll just get corporate raiders, buying 51% of shares, doing a takeover, selling everything valuable, and destroying jobs. We’ve seen that so often in the past years in Germany, it’s completely ridiculous.
- JamesBarney 10y ago
  If your tangible assets are worth more than your company, your company is doing it wrong. For the other side of this equation see Japan, and their zombie companies.
  - kuschku 10y ago
    Oh, it’s not profitable. The company usually ends up far in debt from selling off the assets, but the shareholders or the interim CEO they forced in aren’t responsible. A common scheme is buying control of a company when it’s in a crisis, selling off all assets and real estate, forcing them to rent the real estate again, then the company goes bankrupt, after having no assets left, and the shareholders made profit, and the company has to pay huge amounts of debt. It’s the usual way of destroying jobs.
    - princeb 10y ago
      > It’s the usual way of destroying jobs. unfortunately, if a company is trading below BV it means it's expected to destroy jobs on its own. better to put it out of its misery quickly than to allow it to run itself to the ground.
    - JamesBarney 10y ago
      Wait are you saying that the new shareholders take over a company, borrow a lot of money from a bank. Sell off it's assets. Pay all of it's new found cash out to it's shareholders through dividends. Then goes bankrupt, and screwing over the bank?
      - kuschku 10y ago
        Well, kinda. Sometimes the government has to jump in to save the jobs, sometimes they just move the pension funds for the employees around and find a way to pay that out to the shareholders, etc.

iaw 10y ago

Normally I try to give the benefit of the doubt, when the plan was just to use the funds for the Chan Zuckerberg Initiative it was an acceptable decision to me as presumably Mark's desire for the CZI to succeed would mitigate his risk reduction. The larger issue to me is allowing Zuckerberg to maintain control while working in government, private and public sector interests shouldn't be comingled like that.