BI Chinese Station reported on July 2nd
Mark Zuckerberg is Facebook's founder, CEO, and chairman of the board. He also controls most of Facebook's voting rights. On Facebook, Zuckerberg can use the “hands to cover the sky” to describe, even can not be dismissed or disciplinary action. If other members of the board want to dismiss Zuckerberg, then he simply exemplifies his voting rights and uses the advantage of the number of shares to veto. In addition, current directors are unlikely to ask for the removal of Zuckerberg, because in addition to Facebook employees who receive $350,000 a year in salary, they can also receive millions of dollars in rewards.
Compared to other public companies, Zuckerberg has greater rights than the average CEO. Because many companies are under the responsibility of independent board chairmen and board members, and all are appointed at the request of investors. However, Facebook must follow Zuckerberg's arrangements.
Now, Zuckerberg has already fought with his own shareholders, as mentioned in the BI report last week, 83% of independent investors, that is, not Zuckerberg himself and non-executive shareholders. They all hope that Zuckerberg should step down as chairman of the board of directors.
Taking into account the performance of Facebook's stock price, this is clearly unacceptable to Zuckerberg. Regardless, Zuckerberg should be the CEO of Facebook because his products have been used by more than 2 billion people worldwide. From the price of $38 at the 2012 IPO, Facebook's share price has now soared to $195, bringing an amazing rate of return.
But even so, Facebook investors still think Zuckerberg's power needs to be controlled.
The voice of criticism should be taken seriously
For most ordinary shareholders, it is a rare phenomenon that such a huge number of negative votes are given to the company's CEO. Even the most fierce agency dispute, it is almost impossible for defending investors to raise 20% or 30%. To know that shareholders are usually lazy, selling stocks in their hands is much easier than selling them to the board of directors. If a company wins a vote with less than 90% advantage at the annual general meeting, it will be seen as a very turbulent sign.
Therefore, Zuckerberg’s critics should be taken seriously.
The problem for Facebook shareholders is that Zuckerberg has a history of making mistakes, and even he himself admits this.
Initially, Zuckerberg did not realize that Russia's intervention in the US election through Facebook was a major event, and that Facebook's responsibilities were not determined in time in the Cambridge analysis data scandal. “We don’t have enough knowledge of our responsibilities. This is a huge mistake and my mistake. & rdquo; Zuckerberg once said.
In fact, from the very beginning, Zuckerberg made a mistake, that is, did not pay attention to the privacy of users. When he was a 19-year-old Harvard freshman, he founded Facebook's predecessor in the dorm room. Zuckerberg often mentioned this story in his public speech after his fame. At that time, he sent a series of text messages to his friends, telling others how much data they can use. Since then, Zuckerberg has not paid enough attention to personal privacy issues.
Facebook and Google's "Duopoly" status
But who did not make mistakes when he was young? So Zuckerberg at the time could be forgiven.
But now Zuckerberg is completely different. He is the head of a technology giant, and half of the company's advertising revenue comes from the Internet. Facebook and Google are called "Internet advertising" "double oligopoly". According to a report by Pivotal Research analyst Brian Weiser, the two companies accounted for more than 71% of digital advertising spending in Europe.
This is why Zuckerberg’s power is unconstrained. In March of this year, Facebook's share price fell by 6%, and the company lost $30 billion in market capitalization, but this is only a morning figure.
As a result, Zuckerberg’s misjudgment led to billions of dollars in Facebook’s losses.
But Facebook, which is of system-level importance to the entire Internet, currently looks at Zuckerberg as the biggest source of uncertainty in the future.
In other companies, the founder, CEO, and chairman are usually three different people. If one person goes wrong, there are two others who make corrections.
“The last straw that crushed the camel”
Even Zuckerberg’s own board members are aware of this problem. In December 2016, the shareholder litigation document between Zuckerberg and Marc Andreessen was exposed. The latter was co-founder of Netscape and later became a well-known investor in Silicon Valley and the head of the Andreessen Horowitz venture capital fund.
The lawsuit document stated that the most worrying thing for Erskine Bowles, one of Facebook's board members, was that Zuckerberg served in the government when he had Facebook control, which was very irresponsible. Keberg himself had hoped to leave the company and enter the political arena without giving up control of Facebook. In a letter to Zuckerberg, Anderson said that the biggest problem is how to define the government's services, while not letting shareholders fear that Zuckerberg has lost its promise.
“Oskin felt very uncomfortable about this because Zuckerberg gained more power without leaving the board to retain control. ” Anderson said he is also a member of the Facebook board of directors. “We have to revisit this content every time we call, every time I try to move the topic to this aspect. And at least one of Zuckerberg’s board members thinks he’s too addicted to Facebook’s desire to control. ”
It's unclear what measures Facebook's independent shareholders will take to force Facebook to increase accountability in corporate governance, but it's clear that this is a very necessary tool.