15 ms·
Facebook shareholders are getting fed up with Zuckerberg but can’t do anything
- theseatoms 8y agoThey can sell their shares.
- willio58 8y agoIsn't this easy? Just sell your stock.
- diego 8y agoWell, they can sell the stock. If you don't believe in the CEO and can't fire him, you get out. Sounds like same shareholders are trying to stage a coup, good luck with that.
- TAForObvReasons 8y agoIf you have a 401K or other retirement vehicle, you very likely own FB shares as part of your S&P500 exposure. There really isn't an "S&P499" that includes everything but FB EDIT: assumably the downvotes are from people who are unaware of the situation. https://us.spindices.com/indices/equity/sp-500 https://us.spindices.com/indices/equity/sp-500 FB is the 4th largest exposure. Also, in contrast to what some commenters believe, you cannot short FB from your retirement fund. https://www.irs.gov/publications/p590b https://www.irs.gov/publications/p590b is the relevant part from the IRS rules
- arielweisberg 8y agoIf you own an index fund does the fund actually vote? I wouldn't want my passive investment vehicle to be actively influencing the companies I am investing in.
- mywittyname 8y agoI vote every time my fund manager allows me to.
- deleted 8y ago[deleted]
- TAForObvReasons 8y agoFor most of us who have exposure to the company through our S&P500 exposure in retirement accounts, there's no real alternative that gives broad market exposure but doesn't have FB.
- arielweisberg 8y agoOh they do. Interesting. https://about.vanguard.com/investment-stewardship/how-our-funds-voted/ https://about.vanguard.com/investment-stewardship/how-our-fu... Not clear to me how they decided how to vote.
- lightbyte 8y agoI only opened up the "500 Index Fund" PDF but it was interesting to note that they voted against almost every proposal that was brought by shareholders
- scarletham 8y agoYes, and they voted against the proposals mentioned in the article, except for equal share class voting rights.
- scarletham 8y agoThey have a department responsible for this, among other things. https://about.vanguard.com/investment-stewardship/perspectives-and-commentary/top-ten-questions.html https://about.vanguard.com/investment-stewardship/perspectiv...
- londons_explore 8y agoThey probably vote in the best interests of other people. They possibly even sell the votes... (Is that illegal?)
- tylerhou 8y agoyou can short the stock to reduce your exposure outside of your retirement fund
- dragontamer 8y agoThis right here. This is exactly why hedging options exist. If shorting isn't available, then you can make due with options short-call + long-put is roughly equivalent to a short stock. In any case, the point of a S&P500 fund is to get exposure to ALL companies, roughly in order of their size. Facebook is a big company, so any fund should have a chunk of it.
- kolbe 8y agoThen don't buy the S&P 500. There are myriad investment options in this world.
- mikestew 8y agoAlso, in contrast to what some commenters believe, you cannot short FB from your retirement fund. One most certainly can, as most recently I sold calls from my Fidelity rollover IRA. Now can I literally short stocks from my IRA? I just tried it, and I'm not given the option (whereas I am on another account). Maybe that's a feature I don't have turned on, or maybe I can't literally do that from an IRA. But if I can trade options contracts, I could effectively do the same as shorting.
- TAForObvReasons 8y agoYou are not permitted to use retirement funds for any margin trading, including short-selling. That is why you cannot short from your account: https://www.irs.gov/publications/p590b https://www.irs.gov/publications/p590b > Generally, a prohibited transaction is any improper use of your traditional IRA account or annuity by you, your beneficiary, or any disqualified person. > The following are some examples of prohibited transactions with a traditional IRA. > - Using it as security for a loan. If your IRA let you sell calls, you likely own the underlying equity. Surprising how many people aren't familiar with the rules and just downvote
- mikestew 8y agoYou are not permitted to use retirement funds for any margin trading, including short-selling. Ah, of course, borrowing the shares and all. Hadn't given it a lot of thought, frankly; short trading stays away from the IRA. If your IRA let you sell calls, you likely own the underlying equity. For sure, trying to get rid of the underlying stock that I didn't want anymore. I'd be shocked if one were allowed to use their IRA to trade, say, naked puts. But without looking to see if I've done it, I'll assume one can buy puts (with a trade for the underlying stock) because I buy calls all the time using the IRA.
- encoderer 8y agoYou don’t need to own the underlying, you just need to define your risk by, for example, buying a far out of the money call. You would need to have funds to cover the buying power tied up but many options plays like this would be done over a short period so it can be viable.
- neilv 8y agoRegarding S&P499: as soon as you exclude one company, you're probably going to want to exclude a whole lot more. Read down the list, and it's "this company set back technology and grew by consistently backstabbing partners and customers alike... this company set back the country by taking billions of dollars and then didn't build the infrastructure the fees were for... these companies grew by secretly mass-spying on everyone in ways that were already illegal in other modalities... this company killed all those people through arguably criminal negligence, and walked away..." (I'm a big proponent of passive index investing, and I don't mean to discourage it. Bogle-style US total-market or S&P 500, balanced with Barclay's US bond index. All the better that it's passive, so you're reminded less of how sausage is made, while you try to make sure you won't retire as a homeless street person.)
- Agathos 8y agoFor that reason I'd want a really simple rule, such as "allows unprivileged shareholders real voting control." Except the S&P 500 has actually been enforcing that rule since 2017. Google and Facebook are grandfathered in, though. https://www.dividend.com/news/2017/11/03/companies-multiple-share-class-structures-cannot-be-part-sp-500/ https://www.dividend.com/news/2017/11/03/companies-multiple-...
- mrweasel 8y agoThe retirement vehicles are interesting. The bank managing my pension won't investing my pension in weapons manufacturing, because that would be immoral. Let's ignore the fact that if I show up with a million dollars they would certainly help me buy Raytheon stock, but what if I don't want my pension invested in Facebook. I can't tell them no, they decide what's moral and what isn't.
- SilasX 8y agoTrue, there isn't an S&P499. But: 1) There are mutual funds that do stick to "value" stocks i.e. low P/E ratios, which would exclude companies like FB. 2) If you really want to, you could take a short position that cancels the exposure to FB in an S&P index fund. (I don't know how legal that is in a retirement fund, but I know you can buy ETFs that have short positions in them, so it should be legal in principle.) 3) People hold actively managed funds in their 401ks (though I don't advise it myself), and those funds may decide against such stocks as FB. Fair point that large-cap index funds will have notable exposure though.
- the_watcher 8y agoSure, but the entire point of owning the S&P500 (and indexes like this in general) is to acknowledge that you may be wrong about an individual company, so you protect yourself with exposure to many.
- HuShifang 8y agoI would note that some ESG ETFs in which I hold shares (i.e. where the portfolio make-up and allocations are informed, to some degree, by Environmental, Social, and Governance characteristics of the eligible corporations - basically a somewhat more ethical version of an S&P500 index fund) exclude Facebook while retaining stakes in Google and other major tech companies. (Can't recall with confidence but I think it's a BlackRock iShares fund)
- mikeash 8y agoYou also have no say in how any of those companies are run, so none of those people are the ones being talked about here.
- deleted 8y ago[deleted]
- all_blue_chucks 8y agoThe whole point of owning stock is being able to vote on who runs the company.
- travisjungroth 8y agoThat's not the _whole_ point. You also can have financial benefits.
- khalilravanna 8y agoI'd argue that's the main benefit. At least that's what I gleaned from the Financial Markets course taught my Robert Shiller. You own stock so you can get paid dividends. That's what provides its inherent value which underpins a lot of how the stock market works (at least at a theoretical level).
- the_watcher 8y agoRoughly 40% of global stocks don't even pay dividends [0], so that's pretty clearly not the only reason to own stocks. [0] https://money.usnews.com/money/blogs/the-smarter-mutual-fund-investor/2014/02/04/7-myths-about-dividend-paying-stocks https://money.usnews.com/money/blogs/the-smarter-mutual-fund... (from 2014, but the number likely hasn't changed substantially)
- iaabtpbtpnn 8y agoIn theory, the price of a stock reflects the market's expectation of future dividends. In practice, the market expects lots of things that aren't true.
- Gibbon1 8y agoI've come around to the idea that stocks have an intrinsic value as collateral/store of value. I saw that with a family that owned a condemned property. They couldn't rent it but they sure could borrow against the land price (ever rising) minus the cost of demo'ing the old building. I also think stocks tend to keep up with/beat inflation and thus are better than cash as a store of value.
- paxys 8y agoInvestors can still voice their displeasure, and sometimes it works (see: Uber)
- echo85 8y agoThey can do something. sell.
- smallgovt 8y agoFor those commenting that shareholders should sell, it's possible that shareholders believe there's upside with Zuckerberg at the helm AND even more upside without him. So, selling doesn't make sense.
- save_ferris 8y agoWhy would they be getting this frustrated with him if they saw upside with him at the helm?
- dsfyu404ed 8y agoIf the CEO is tripping over a dollar to pick up a penny he's still picking up a penny but investors have a right to be irked that he's not picking up the dollar.
- spyspy 8y agoThere are options strategies that will pay off if the stock price _doesn’t_ rise enough.
- joe_the_user 8y agoNot only did they buy the shares but they bought the shares knowing the degree of control Zuckerberg had. Zuckerberg has clearly kept control of Facebook with the idea that he had a "mission". While various folks might justifiably doubt Zuckerberg's integrity, it seems reasonable that an entity like Facebook should be run with some commitment to longer term integrity and principles. Whatever process exists clearly should be insulated from day-to-day share prices and the multiple stock voting types achieves that. Oppositely, activist shareholder coups generally aim to extract as much money as possible as quickly as possible from a given company. It seems unlikely this approach would involve more privacy protection, less manipulation, etc. Just the opposite. The problem of a private entity becoming the host of a lot of essentially public discourse certainly remains. The thing is that I personally trust the powerful enemies Facebook has found (mainstream media, various elected officials, etc) even less than Facebook, which speaks a bit to problems this society is having.
- jliptzin 8y agoThey knew what they signed up for when they bought the stock. No sympathy for them whatsoever.
- i_am_nomad 8y agoThis is the only reasonable outlook on the situation, sadly. People knew who and what Zuckerberg was when FB went public. Investors hoping to ride the hype and then dump him when convenient are the true “dumb fucks.”
- timavr 8y agoThis article is so one sided. Either you have votes or don’t have votes.
- TAForObvReasons 8y agoFor those commenting that shareholders should sell, FB is in the S&P 500. In standard 401K and other accounts, there is no way to own an S&P499 product that has no exposure to FB. Many of us are indirect shareholders and don't really have a compelling alternative
- amha 8y agoYou could short FB.
- TAForObvReasons 8y agoYou cannot short any stock from most retirement funds EDIT: for those downvoting, please point to a retirement vehicle that does support shorting
- mattferderer 8y agoI didn't downvote but the closest I know you could do to this is buy an inverse ETF that is heavy in Facebook. I don't think there are any inverse ETFs that would even have more than 10% Facebook.
- the_narrator 8y agoComplaining multiple times about being downvoted tends to add to more downvotes.
- amha 8y agoTrue, but you can short the stock from elsewhere in your portfolio (i.e., just a standard nonretirement account), and it's economically equivalent (modulo some stuff with taxes).
- umeshunni 8y agoSo, what control do you have over the other 499 stocks?
- ummonk 8y ago
- makotech222 8y agoLmao now the investors know how workers feel every day. We do the work, but have no say in how our labor is used.
- ChrisCinelli 8y agoMy experience tells me that FB has been better off in the long term having Mark's dictatorship than having to deal with a horde of short term investors that wanted a way to make quickly a return even if it meant burning users down. See also: "Here’s an unpopular opinion: We’re lucky Mark Zuckerberg is in charge" ( https://medium.com/swlh/mark-zuckerberg-facebook-stock-drop-shouldnt-step-down-a4277737152e https://medium.com/swlh/mark-zuckerberg-facebook-stock-drop-... )
- mrweasel 8y agoI think you're right. If we think that Zuckerbergs decisions where bad, in terms of user privacy, just wait until impatient shareholders are in charge. In many ways I believe that Zuckerberg is the sole reason that Facebook hasn't crashed and burned at this point.
- soup10 8y agoThey would be in much worse shape if they hadn't acquired Instagram at a good price.
- bartread 8y agoQuite possibly, but wasn't it Mark Zuckerberg who thought that acquisition was a good idea?
- soup10 8y agoTrue but its a bit of a problem when your hegemony keeps getting threatened by the latest flavor of the month social network and quarter after quarter your getting pressured by shareholders to keep increasing advertising revenue.
- zitterbewegung 8y agoBuying a company out is much cheaper than it disrupting you .
- jonathankoren 8y agoThe idea of giving supervotes to founders is always going to come back and haunt investors. Uber is stuck with Travis. Facebook is stuck with Zuck. Selling the stock is meaningless, since the crux of the problem is that the problematic individuals control the majority of the votes, while holding a minority of the shares. Look at FB. Zuck personally has 3.98 billion votes. All the other shares only have 2.4 billion votes. So everyone sells, drives down the price of the stock, and then what? Control doesn't transfer. Literally nothing changed. Hell, it might even get worse, if Zuck decides to purchase Class A shares himself.
- frisco 8y ago...but Uber isn’t stuck with Travis?
- Zak 8y ago> So everyone sells, drives down the price of the stock, and then what? Then those people aren't shareholders in a company whose management they find unacceptable. Problem solved, from a certain point of view.
- vkou 8y agoIt's in Zuck's personal interests to maintain a high share price, because his lifestyle is predicated on borrowing money against the current worth of his shares.
- jonathankoren 8y agoZuckerberg is worth 66 billion dollars. Do you really think his lifestyle is going to change if he was suddenly worth a mere 660 million? (That’s a 99% reduction.) I don’t think you really have a grasp on just how obscenely wealthy this man is, and how little it actually effects him.
- dredmorbius 8y agoThat depends tremenously on how his wealth is tied up, what is liquid, and how collateralised it is. And wealth, as Mr Hobbes says, is power.
- sbov 8y agoAll of those missteps in the article seem extremely unlikely to have been avoided regardless of governance.
- paulpauper 8y agoAs a Facebook shareholder, i could not be happier. plot the performance of Facebook vs. the S&P 500 since the IPO. Facebook s a money-printing machine thanks to mobile ads, which includes Instagram. There will always be shareholders who dissent. Has Facebook made mistakes, yeah, not but enough to make me sell.
- DSingularity 8y agoQuestion, aside from reduced confidence in future value of future value and side from better opportunities elsewhere — what would make you sell a company that is making good money?
- vthallam 8y agoNot op, but I'd sell if I think there's no upside anymore.
- JackFr 8y agoSell the stock. Buying a stock with such an awful capital structure is like betting on someone else's poker hand. It's great if you think they're a great poker player, but when they begin to do foolish things, you have no say. And then to complain about the situation you created is ludicrous.
- areyouseriousxx 8y agoI feel as though this piece is a bit alarmist, but I'm curious if we are approaching the first big test of these ownership structures of public companies where the founder(s) maintain majority power. Up until now, Facebook has consistantly provided excellent returns for investors, and this has also allowed other companies, like Snap, to have similar shareholder voting rights. Investors have yet to penalize a company at their IPO or overall stock price for this practice, but I wonder if we may see a change in that attitude if Mark Zuckerberg and Facebook's other shareholders start to have significant public disagreements.
- jshaqaw 8y agoDual share class IPOs always seem fine when a company is in its hot growth mode and the founders have a halo. They very rarely end well. Shareholder democracy works. A CEO who is able to convincingly explain their long term vision to markets and has earned credibility has nothing to fear from the short term hordes.
- treis 8y ago>They very rarely end well. Can you provide some examples of failures?
- bickfordb 8y agoSnapchat
- skinnymuch 8y agoBut Snapchat’s initial decision to be a “camera” company. Along with their redesign likely would’ve been done anyway. Regardless of voting structure. After both of those you can say things would’ve changed. But not before. And i don’t see how you can say Snap would be in better shape now with the ousting of the founders and their control since the redesign. What would have been done differently?
- khazhou 8y ago> Shareholder democracy works Examples needed.
- maehwasu 8y ago> Shareholder democracy works. As long as the unsupported assertion is confidently stated in a short, declarative sentence, that's good enough for me.
- motohagiography 8y agoHave commented before that something as politically powerful as Facebook's graph will be the focus of machinations. Zuckerberg is certainly not the most evil person who could run that company, but it means he's got to be sure he can fend off every more evil person who thinks s/he can. If we can imagine hypothetical circumstances under which he could be forced out, or lose control of the graph it would be a good bet to watch for events that might set that in motion. Right now, they're using leaks to discredit him and to isolate him from mainstream political support. The most plausible play is one where they leverage antitrust to "break up" the company, leaving him in control of the advertising business and his shares intact, while getting the graph into hands who can be more "politically accountable," that is, more connected, who can then use the graph for direct political ends. Democrats are making noises about it already, and oddly, he may have more allies among neocon Republican types who would prefer to deal with an internet dictator or king than a slippery progressive committee. Conspiracy? Hardly. It's just incentives.
- pg_is_a_butt 8y agouh... sell and #deletefacebook
- OnorioCatenacci 8y agoSo am I missing something here? If they think Zuckerberg is so damaging to the company why don't they sell their stocks and invest in a company they feel good about?
- caconym_ 8y agoBecause waaaaaaaah. Why should I not be able to have my cake and eat it too, regardless of who else is left holding the bag and/or other negative consequences that may result? I'm no fan of Facebook (in fact I am the opposite), but damn.
- moomin 8y agoThe problem isn’t that Zuckerberg isn’t up to the challenge of running Facebook. It’s that no-one is.
- lowdose 8y agoWe should bail zuckerberg out and open source the data. Every country chip in a couple billion and its done.
- ucaetano 8y ago"open source the data" What data? User's data? Algorithms? There's little value in FB's algorithms, the value is simply in its usage by users, content creators and advertisers. Without those, FB is worthless.
- microdrum 8y agoThey could sell their stock.
- pbalau 8y agoFB shareholders are bloody pleased with how the stock rebounded after last year. I am, not only 60+percent over, but I also have a crapload of tax credits.
- quotha 8y agoThey can always sell
- cmurf 8y agoThey can become former Facebook shareholders. Nothing says they can't sell that stock if they don't like the compulsory leadership regime they originally signed on to.
- tembo76 8y ago1. They aren’t really fed up, investors who are fed up sell, they don’t whine 2. It sounds like investors want to eat their cake and have it too; they want the profits without the man, it doesn’t really work that way, you knew the shareholding structure when you bought, if you were uncomfortable with it, you shouldn’t have bought. 3. This shareholding structure gets changed by regulation or Facebook having its stock price collapse. Facebook’s profitability is improving so that won’t happen anytime soon. Government action is a possibility depending on how the 2020 election goes. Note: The shareholding structure is probably a perverse incentive that will lead Mark Zuckerberg to self destruct in the longer run (Bezos, Gates etc all run the risk of being fired, but they run their companies such that the shareholders always wanted them there), for now, he’s safe.
- thorwasdfasdf 8y agoAll the article is saying is that Zuck owns most of the votes therefore the other stock holders can't vote against him. It just seems like the only one getting fed up with Zuckerberg is the media. They can take any ordinary sounding news and turn it into a vilification of Zuck or facebook. It's so blatantly obvious, I'm loosing respect for a lot of these so called "professional" media outlets ~ it would seem the quality and objectivity of their articles are going downhill, at least with regards to the tech industry. I'm sure if Zuckerberg sold most of his shares, relinquishing control of FB votes, the media would find a way to twist that into bad news as well.
- ineedasername 8y agoYou can't say it's just the media when the whole point of the article was to expound upon the 4 shareholder-driven ballots about being fed up with the management structure.
- strikelaserclaw 8y agoI'm no fan of zuckerburg but as far as generating money for FB, he's the man for the job.
- 0x54D5 8y agoI bought at IPO and sold when I deleted my Facebook account. Now all Facebook owned domains are null routed on my network. I will no longer be party to the social disease that is "social networking". I urge all people of good conscious to do the same.
- cryptokernel 8y agoYou can say that again. Just leaving this here: Do tasks, get paid. Earn your crypto in the CoinCircle website: https://coincircle.com/l/50VVxbObg3 https://coincircle.com/l/50VVxbObg3
- craftyguy 8y agoSure they can, they can dump their shares of facebook. If enough of them do it, the share price will fall. Nothing motivates big shot CEOs to attempt change than the price of their stock tanking.
- jbverschoor 8y agoWhy would you think so? They already raised money with their stock. And mark, or anyone with enough capital, would rather be in full control than have to report/listen to shareholders. Apple is buying back stock Elon is playing some game around taking Tesla private again And mark, well he does have to, because he’s in control
- craftyguy 8y agomark is not trying to take facebook off the market, so I'd be willing to bet that he and other corporate officers are going to react to share price. the vast majority (I've seen estimates of ~98%) of his wealth is still tied directly to facebook stock.
- anbop 8y agoIn 15 years Zuckerberg has manufactured half a trillion dollars out of thin air. Canning him would be like firing Tom Brady: not necessarily stupid but not a decision you would want to make hastily.
- JMTQp8lwXL 8y agoIt wasn't like he alone created that half a trillion in value. Facebook employs thousands of people. He was at the right place at the right time.
- anbop 8y agoYes, but if not for him, those thousands of people would be creating that value for people other than Facebook stockholders.
- smsm42 8y agoA lot of these stockholders are institutional investors or people investing through them in index funds, mutual funds, ETFs and such, so for them it probably wouldn't matter - if another company had taken place of Facebook, they'd invest in that instead, with the same result.
- a3n 8y ago> Facebook shareholders are getting fed up with Zuckerberg but can’t do anything They can sell. Probably wouldn't drop the share price that much, given that Zuckerberg owns almost all of the "real" shares, and if a dramatic number of shares were sold, they'd probably find their way to Facebook. But they wouldn't have to be fed up shareholders. He's never going to change.
- unstatusthequo 8y agoBullshit. Shareholders can sell their shares. Enough of that and institutional abandonment ought to do the trick.
- ajaygeorge91 8y agojealous much laTimes?
- basetop 8y agoIf they are fed up, they can just sell the shares and move on. Honestly, what is newsworthy about shareholders being upset with a CEO? There are shareholders upset with every publicly traded company. Considering the stock is up nearly 60% in the last 4 months, it seems like most shareholders aren't upset at all since the stock is being bid up by investors regardless of the "survey/poll" by one of the proxy sponsors. The author ends with "Of course, they knew that when they bought their shares, so what do they really have to complain about?" Exactly. Shareholders, especially funds like Trillium Asset Management, knew of the share and voting structure of FB. It's pretty much shareholders share in the profits while Zuckerburg controls the company. So why write an entire article ( much of it blatantly anti-zuckerburg and anti-facebook ) about it? What an odd article. It, like most facebook related articles recently, comes off as biased hit pieces with no substance.
- rossdavidh 8y agoMy impression is, they need to make so many pieces per day, and each piece needs to be a certain length, so they make that many pieces whether they really have anything to say or not.
- dosy 8y ago> Zuckerberg owns or controls 88.1% of Facebook’s Class B shares, which each have 10 votes at the annual meeting — 3.98 billion votes overall. There are only 2.4 billion Class A shares, which are the only shares ordinary investors can buy. So any proposal Zuckerberg doesn’t like will fail by nearly a 2-1 margin, assuming all Class A investors vote together, which never happens. (Zuckerberg owns 0.5% of the Class A shares.) when did this powerful structure come into existence in the history of Facebook and who was responsible for it? was its origin with Peter Thiel's initial investment and was it his idea to make it so the founder would preserve their power?
- scottrogers86 8y agoThey can sell...?
- zxcvvcxz 8y agoSure they can, sell the damn stock.
- deleted 8y ago[deleted]
- eVeechu7 8y agoThey can sell.
- noname120 8y agoHere is a related article that is highly interesting: https://corpgov.law.harvard.edu/2018/04/15/are-dual-class-companies-harmful-to-stockholders-a-preliminary-review-of-the-evidence/ https://corpgov.law.harvard.edu/2018/04/15/are-dual-class-co... It reviews the evidence related to dual-stock companies. Facebook is such as company since there are class A and class B shares (which have 10 times the vote power). Here is a follow-up article that is worthy of attention as well: https://corpgov.law.harvard.edu/2019/04/17/whats-the-problem-with-dual-class-stock-a-brief-response-to-professors-bebchuk-and-kastiel/ https://corpgov.law.harvard.edu/2019/04/17/whats-the-problem...
- deleted 8y ago[deleted]
- deleted 8y ago[deleted]
- Giorgi 8y agoYeah, poor shareholders can't kick founder from his OWN freaking company am I right?
- lotfidev 8y agoThey knew what they were getting into when they started investing.
- elchupanebre 8y ago"Facebook shareholders ... can’t do anything" - that's not true. They can sell FB stock.
- xbmcuser 8y agoThey can do something sell the shares they own. They bought them knowing he will have control.