Facebook Is Exhibit A In The Case Against Dual-Class Shares

Mark Zuckerberg, CEO of Facebook
Mark Zuckerberg, CEO of Facebook

If there’s one takeaway from the recent news about Facebook that pretty much everyone should be able to agree on, it’s this: A CEO having imperial control over a public company is a terrible idea. Not just for investors, the board, employees or customers—but for the CEOs themselves.

Through Facebook’s dual-class share structure, Mark Zuckerberg controls the company with unassailable 60 percent authority. Shares can go up, shares can go down (and down and down), but there is nothing and no one that can override him. It should have been a concern since before the 2012 IPO, but a moonshot stock price and cries of “change the world” have a way of slathering over cracks in a foundation.

Business, when played best, is a team sport. No one—not even someone smart enough to start Facebook—is smart enough to see around all the twists and turns that come from running an enterprise of such sheer complexity, scale and centrality to society. The world’s best-run companies—not the fastest-growing companies—but those that are built to outlast any one leader, have lots of guardrails and plenty of accountability.

Not Facebook. What Zuckerberg says goes—right into the grave. That’s right: He can even name a successor to take control of the company in case of his death.

So what happens when Zuckerberg gets it wrong? We’re getting a pretty good idea right now, after Zuckerberg and his right-hand, Sheryl Sandberg, stuck to their flawed assumptions about the business and botched a series of key strategic and tactical decisions as a result. Along the way, they brushed aside the views of others—from their board and members of their executive team—who might have helped. To paraphrase their now-famous mantra, they moved fast, and things got broken.

CEOs making mistakes are pretty common, of course. They’re human. But in Menlo Park, California, center of the global-social-media-industrial complex, there’s a difference: A) The stakes for society are enormous; and B) There’s nothing anyone can do about it.

Maybe activists will bang their pots and pans, ISS will give the company a thumbs down and a divided Congress will make threats and call a hell of an entertaining hearing (or worse: they could actually try their hand at regulating—a scary thought). But at the end of the day, the only one who matters, the only vote that counts, is Zuckerberg’s.

Facebook has always been a pure-play bet on one brilliant Harvard dropout and his vision of connecting the world’s people in exchange for permission to mine and monetize their intimate personal information. Investors, customers, lawmakers and employees were good with that as long as the profits were popping, the cat pics were posting (without eroding global democracy too much) and the options remained in the money.

And now? Like everything else at Facebook, that depends on Zuckerberg, and Zuckerberg alone. He deserved better.

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