Despite growing opposition to Facebook’s pivot into the metaverse, Mark Zuckerberg can’t be fired.
Zuckerberg has organized the Meta so that he has complete control over any decisions that affect the company.
Meta isn’t the only company giving insiders super voting powers. Google and Snap have similar settings.
Mark Zuckerberg is not going anywhere in Meta.
Despite the growing retreat from the multi-billion-dollar Facebook metaverse gamble, Mark Zuckerberg has built his company in such a way that it is almost impossible for him to leave his role as CEO unless he wants to, making him one of the most powerful CEOs in American companies.
What is the double layer structure?
Facebook, which is now Meta, has a dual class structure, which means that common shareholders own one type of stock, Class A, while Zuckerberg and a small circle of insiders own another type, Class B.
Class B shareholders get 10 votes per share, while Class A holders only get one vote, meaning Zuckerberg and other Class B shareholders are essentially untouchable.
Zuckerberg alone owns 90% of the company’s Class B stock, enough to maintain absolute control of the company himself.
It does not leave investors with many options
Traditionally, all shareholders get an equal say on issues affecting the company, which means that each share gets only one vote, regardless of who owns it.
However, this was not the case at Zuckerberg’s company.
Supporters of dual-class structures argue that “such control is desirable because it allows charismatic, visionary founders and entrepreneurs to implement their vision…without having to worry unduly about the performance of the stock market,” according to a 2018 CFA Institute report on this the topic .
That logic applies to Meta investors, said Jay Ritter, a professor of finance at the University of Florida.
“Up until this year, Facebook’s stock has performed very well, which is one of the reasons why investors wanted to buy shares with lower voting rights,” he said.
This year, the account has changed. Many investors have been frustrated with Zuckerberg’s plans to spend, and likely lose, more money by inventing the metaverse, but they are left with little choice.
“Selling your shares is the only alternative,” Ritter said.
Increasingly, investors have done so, sending stocks lower: This year, Meta stock is down more than 70%.
Mita is not alone
But Meta isn’t the only tech company giving insiders oversight powers.
“In recent years, many technology company IPOs have used a dual-class structure,” Ritter said. For example, Google and Snap both have a similar setup.
Ritter believes that Zuckerberg really thinks he’s doing what’s best for Meta shareholders by guiding his company into the metaverse.
“If he owns a lot of stock, he thinks he’s doing the right strategy,” Ritter said.
Most of Zuckerberg’s fortune is tied up in Meta. According to the Bloomberg Billionaires Index, his net worth has declined by $81 billion so far this year.
Read the original article on Business Insider
#Heres #Mark #Zuckerberg #fired #Meta #CEO