After much debate and debacle, it has happened. Facebook CEO Mark Zuckerberg has received an overwhelmingly negative vote from its shareholders in response to questions rising about his chairmanship, policies and the general route in which the company has progressed. In this situation, any other chairman would have had to leave the respective company’s board, but not him.
The reason for this is the strategically arranged two-class shares issued by Facebook. The Class-B shares, held by Mark Zuckerberg and Facebook inside circle of board members, have weightage of 10 voting shares each. In comparison, the Class-A shares issued to the public and to Facebook’s majority shareholders, all count as one voting share. In essence, Zuckerberg has absolute power and authority over Facebook, and even when strongly voted against, he can simply pull in his weight and dismiss anything that displeases him.
And that, is exactly what he did.
What happened so far
At its latest annual general meeting (AGM), protests against Zuckerberg grew stronger, and an angry emoticon was flown over Facebook’s headquarters. According to reports, a staggering 68 percent of Facebook’s “ordinary” shareholders (those who hold the Class-A shares, voted against Zuckerberg’s continued chairmanship of the company, stating that the company would benefit from the presence of an independent chairman, who can also hold him accountable for any dubious practice, thereby acting as a layer of insurance for the investors.
In a separate vote, the shareholders made an even larger, 83 percent vote against the dual-class share structure at Facebook, which practically renders the entire general meeting and shareholders’ vote into a quixotic comedy. As of now, Zuckerberg holds 75 percent of Facebook’s Class-B shares, which means that he alone has 60 percent of the company’s voting power. As a result, even if every single person apart from he himself votes against a proposal, there’s nothing that anyone can do to prevent it.
It is this paranoid stronghold that has caused the issue to appear, with a massive majority of Facebook’s investors now demanding the founder-CEO to step down as chairman. This is further compounded by the fact that Facebook has made a whole bunch of questionable decisions of late, showing thorough disregard for their user’s privacy and treating them as nothing more than trade units. Cases in point include Facebook’s role in the 2016 US elections, the Cambridge Analytica scandal, the Facebook Research teen-spying app, leaked internal conversations about favouring specific companies that pay for private data, and so on.
Zuckerberg, on the other hand, has attempted to defend his near-arrogant stance on his company by insisting that he takes his users seriously, and privacy is of great importance to him and his company. A redesign of layout and fundamental operations on Facebook claimed to address this factor, but truth be told, it barely does. Facebook also faces a bunch of antitrust lawsuits, which it aims to defend. According to Zuckerberg, and as he said in the memorable congressional hearing in the US Capitol, he does not believe that Facebook is a monopoly, or engages in monopolistic practices.
Several data breaches, over time, have clearly revealed that Facebook engages in tracking a user’s phone even after the app is closed. This was reportedly being done to find out about any competition it may have, and simultaneously integrate the requisite feature into their own app, or in cases of Instagram and WhatsApp — buy them over for billions of dollars.