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It's not his company. It's a public company in which he does not own more than 50% of stocks. He just has more than 50% voting rights, which should never have

• wbl 7y ago
  Dual share classes have existed for a long time. If people dont like the share structure they can not invest.
  • toomuchtodo 7y ago
    Or compel the SEC to require a deprecation of dual class structure as part of a settlement agreement. All Facebook crimes are securities crime when you’re public (apologies to Matt Levine). This administration seems to want to go after tech. If you’re a large Facebook investor, encourage them. You’re going to lose some value, but less than if you leave Mark in charge.
    • bilbo0s 7y ago
      But there won't be any settlement agreement. That's the problem. Assuming there will is akin to just saying, "Well, someone will fix it" while executing the Jedi Hand Wave gesture. We're not Jedi. If we want things to change, we have to change the actual laws. Expecting lawyers to find some violation under current law is fanciful in the extreme.
  • eeeeeeeeeeeee 7y ago
    It’s really not that simple when FB is in so many funds / indexes. It has market effects even if you don’t invest in it.
    • wbl 7y ago
      That was a choice with passive investment. If you want active you can do it and see if dual structure is harmful.
      • bilbo0s 7y ago
        True. There's always the option of putting your money where your mouth is. If you're saying a dual class structure is bad, and not in the interest of shareholders or companies? I mean, well, you should be willing to put your money behind that assertion. It should be to your benefit because the implication is that not investing in companies with dual class structures should be more profitable over time.
    • deleted 7y ago
      [deleted]
  • ineedasername 7y ago
    Yes, they can decide not to invest, but that doesn't preclude pushing for a change, and saying they don't think the current structure is in the best interest of the company or shareholders. (I'm not sure they're right though. Zuck's track record isn't stellar, but I shutter to think what a completely mercenary company chasing every last cent might do. Much bad as we've seen, I don't think we've seen things as bad as they could be)
    • TuringNYC 7y ago
      I’m a willing investor in FB, but not everyone is. If you are a pensioner, quite likely your money is invested in index funds containing FB....so it isn’t that easy. That said, these voters should try to change the SEC guidelines, no use hating the player, change the game.
      • ineedasername 7y ago
        I figure there's no need to choose. They can try to change from within the company and also push the SEC for reform. Personally I don't like the idea of a Zuck autocracy, but I'm also not convinced that anythinng else would better. I know, hardly a decisive opinion, but I don't think we've yet seen a FAANG level company go completely balls to the wall monetizing ever last bit of personal data, so it's a tenuous balance.
      • AstralStorm 7y ago
        Why should SEC limit or ban dual share stock? You know exactly what you're getting, a semi-public company.
  • bilbo0s 7y ago
    This is what I don't understand? I mean, did people not read the prospectus? What, exactly, did they think "dual class" meant? These people should consider divesting, because I'm not certain that they studied their investment target closely enough to wargame out different possible outcomes prior to throwing money at FB.
    • Bartweiss 7y ago
      You're right that this was obvious, but I think the people actually guiding this vote did read the prospectus. It's just random armchair commentators who are outraged that this outcome is unfair. This vote was proposed by Trillium Asset Management, an activist investment group. They hold $7M of Facebook stock, and the group they lead to bring the ouster vote appear to control around $3B. These are people who knew what they were investing in, and decided to bring this vote to put pressure on Facebook, not in a deluded hope that it would pass. What's more, a bunch of the outside investors seem to want more leverage without wanting Zuckerberg out - there's a 15-point gap between "voted for a new chair" and "voted to end dual class stock". More broadly, this is just a round of the kind of corporate advertising via news that PG called the 'submarine' (http://www.paulgraham.com/submarine.html http://www.paulgraham.com/submarine.html). Trillium called a vote that couldn't pass, and was on hand to provide a pithy closing quote to Business Insider's reporter. BoingBoing is running the story with a narrative of fighting the evil tech billionaires, never mind that Doctorow normally hates the idea of companies "disciplined by shareholder choices". Meanwhile, Trillium's website posted the story "Trillium's Ongoing Pressure on Facebook Governance in the News" - this is a conscious and apparently quite effective effort to create a "Zuckerberg ignores his shareholders" narrative.
      • bilbo0s 7y ago
        >this is a conscious and apparently quite effective effort to create a "Zuckerberg ignores his shareholders" narrative... My point is that the prospectus "...is a conscious and apparently quite effective effort to create a 'Zuckerberg ignores his shareholders' narrative..." It's quite literally, publicly stated company policy in this regard.
  • wnevets 7y ago
    Yeah I have very little sympathy for "powerless" shareholders of a multi-billion dollar company. How could they not know what they were getting into before investing?
• akvadrako 7y ago
  It is his company - that's basically what it means to own more than 50% of the voting shares.
  • TheTruth1234 7y ago
    That might not be the only factor. The SEC commonly investigate how much of a douchebag the owner is.
  • hjk05 7y ago
    No it doesn’t there are rules and requirements beyond those of a privately owned company, which is for instance why he can’t just call a vote tomorrow nullifying every share except for his own without seeing it blow up in his face. It’s not his company, it’s a public company in which he has controlling shares. He can’t do whatever he likes without consequence, but he can definitely retain control even in the face of rising criticism.
    • bradstewart 7y ago
      Sure, he can't violate the law. But (within the confines of the law) it is effectively his, and only his, company.
• maxlybbert 7y ago
  > He just has more than 50% voting rights, which should never have been allowed, and should be one of the things that SEC should look at if/when any kind of antitrust probe is done. S&P refuses to add companies with dual-class stock to the S&P 500 or other benchmarks they control (Facebook was grandfathered in). But I try to invest my 401(k) according to what I understand of academic research, and they never mention the importance of avoiding dual-class stock ( https://web.stanford.edu/~wfsharpe/art/active/active.htm https://web.stanford.edu/~wfsharpe/art/active/active.htm ). I understand that some people have personal crusades about this or other questions of corporate governance; but those are their crusades, not mine, and they aren’t responsible for my financial well-being.
• skinnymuch 7y ago
  > It leads to deviant behavior by public companies. I haven’t seen this be true any more than public companies where stocks are directly equal to voting rights. Why would it be any different?
• kevin_b_er 7y ago
  I'd call it a non-public corporation. A public corporation is one who's ownership is distributed among the public. The public does not have distributed ownership, as ownership would imply control. The public so-called=ownership has ZERO control over the corporation as a private entity has ALL control. As such, facebook is not a public company by the common meaning. It is a public company in label only. This is a psuedo-public company as long as a single individual owns/controls the company.
  • JetSpiegel 7y ago
    I can trade their stock on NYSE, so it seems a public company to me...
• uncletammy 7y ago
  > It leads to deviant behavior by public companies From my experience, having majority shareholders don't lead to "deviant behavior" any more than companies with no majority shareholder. In fact, one could argue that many of the ugly collective action problems facing the world today stem from organizations in which nobody has the power to veto unethical policies. I think the problem here is that Zuck can veto. I think it's that Zuck is unethical.
  • mempko 7y ago
    What horrible 'collective action' policies are you talking about ? Seems entirely made up.
  • pm90 7y ago
    It’s both. You can take financial resources of the public or you can have veto power. If you have both, you’re not a “Public Company” anymore and your stocks should be immediately delisted from public markets.
    • bilbo0s 7y ago
      To do that, you would need to change the law first, and then go after FB. Given the fact that what happens appears to be us going after tech firms under current law, I wouldn't hold out much hope for needed changes in the legal environment. For some reason, (money), people just don't want to do that.
  • Ill_ban_myself 7y ago
    I've never understood why rank and file employees don't get a vote despite not owning stock. Arguably, they are the ones most affected with the most to lose. A salaried employee with no stock options likely depends more on their continued paycheck and the continued success of the company than any large shareholder or even the class of employees who hold stock. Their vote should count MORE than the board.
    • testvox 7y ago
      Because they don't own the company... You say they have the most to lose, but I would say the investors who put 100s of millions of dollars into the company have more.
• xivzgrev 7y ago
  Facebook agreed to certain additional rules (eg quarterly reporting) in exchange for being able to solicit investment from the public. There was no rule against the share classes. I agree with others. It was well known that Facebook was exclusively controlled by zuck when it went public, and that wouldn’t change. I think the only recourse is to lobby the sec to prevent it from happening in future IPOs.
• onetimemanytime 7y ago
  >>He just has more than 50% voting rights, which should never have been allowed And that what matters in this case. The knew what they're buying, it was a huge debate about it in the media too. All was legal and was disclosed. Personally I would not buy stock in a company structured this way, but if I did, I would not have a right to complain.
  • ddingus 7y ago
    Actually you do have the right to complain. It is the expectation of action missing.
• malloreon 7y ago
  Reminder that the deviant behavior is caused by the employees of these companies. They are responsible for their actions, and for continuing to work there despite the evil they do every day.
• dexen 7y ago
  Plot twist: the worth of shares in the hands of the investors is highly dependent on Zuckerberg being at the helm & maintaining Facebook on the course. If they ousted Zuckerberg, or curtailed his power to make decisions, the shares' worth would enter a slow, but inevitably terminal, decline. Side note, I disagree with, and condemn Facebook's certain practices. The above post is only to indicate the company as a whole is a highly efficient money making machine.
• Aeolun 7y ago
  He started it. He’s owned it right up until the IPO, and still retains 60% of the voting power. I’d say that for all practical purposes he controls it (but not owns). Good thing too. Facebook wouldn’t be the same without Zuck.
• esoterica 7y ago
  The idea that a Facebook run by the shareholders would be a kinder, gentler, less evil company than the current iteration of FB is laughably naive. When shareholders revolt against management it’s almost always because they want the company to be more ruthless about cost cutting and boosting profits at the expense of customers and employees. You really believe that a Carl Icahn type is going to spend billions of dollars buying up a bunch of shares just to pressure Facebook into being more socially responsible?
  • joejerryronnie 7y ago
    Shhhh, you're pulling back the curtain and forcing the keyboard social justice warriors to think for themselves. Not very nice.