6 votes

Breaking Up Facebook Isn’t Enough

2 comments

  1. spit-evil-olive-tips Link
    This is a response to the NYT op-ed about breaking up Facebook. The author argues that the core problem is really the dual-class share structure Facebook uses, which allows Facebook to reap all...

    This is a response to the NYT op-ed about breaking up Facebook. The author argues that the core problem is really the dual-class share structure Facebook uses, which allows Facebook to reap all the benefits of being a publicly-traded company while suffering none of the perceived drawbacks:

    Facebook has two classes of stock. One of the purposes of stock ownership is to give investors a say in the way a company is governed. That’s done through the board and through proxy votes by individual and institutional investors. In Facebook’s case, Class A shares are issued to the latter; they are worth one vote per share. Class B shares are controlled by Zuckerberg and a small group of investors and insiders; they are worth 10 votes per share. Zuckerberg controls the majority of Class B shares.

    This structure, known as dual-class stock, has become more common in recent years as a way to give founders and investors greater control of their companies, even after they go public. Proponents of the multi-class approach sometimes claim that the structure helps executives focus on long-term growth, but critics see it as a way to avoid oversight even after a company goes public.

    3 votes
  2. rain1 Link
    it'd be a start though

    it'd be a start though