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https://theconversation.com/mark-zuckerberg-can-sack-11-000-workers-but-shareholders-cant-dump-him-its-called-management-entrenchment-194333>
"“I want to take accountability for these decisions and for how we got here,”
tech billionaire Mark Zuckerberg told the 11,000 staff he sacked this week.
But does he really?
The retrenchment of about 13% of the workforce at Meta, owner of Facebook and
Instagram, comes as Zuckerberg’s ambitions for a “metaverse” tank.
The company’s net income in the third quarter of 2022 (July to September) was
US$4.4 billion – less than half the US$9.2 billion it made in the same period
in 2021.
That’s due to a 5% decline in total revenue and a 20% increase in costs, as the
Facebook creator invested in his idea of “an embodied internet – where, instead
of just viewing content, you are in it” and readied for a post-COVID boom that
never came.
Since he changed the company’s name to Meta a year ago, its stock price has
fallen more than 70%, from US$345 to US$101.
Selling is really all the majority of shareholders can do. They are powerless
to exert any real influence on Zuckerberg, the company’s chairman and chief
executive.
If this had happened to a typical listed company, the chief executive would be
under serious pressure from shareholders. But Zuckerberg, who owns about 13.6%
of Meta shares, is entrenched due to what is known as a dual-class share
structure.
When the company listed on the NASDAQ tech stock index in 2012, most investors
got to buy “class A” shares, with each share being worth one vote at company
general meetings.
A few investors were issued class B shares, which are not publicly traded and
are worth ten votes each.
As of January 2022 there were about 2.3 billion class A shares in Meta, and
412.86 million class B shares. Although class B shares represent just 15% of
total stock, they represent 64% of the votes. It means Zuckerberg alone
controls more than 57% of votes – meaning the only way he can be removed as
chief executive is if he votes himself out."
Cheers,
*** Xanni ***
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mailto:xanni@xanadu.net Andrew Pam
http://xanadu.com.au/ Chief Scientist, Xanadu
https://glasswings.com.au/ Partner, Glass Wings
https://sericyb.com.au/ Manager, Serious Cybernetics
