There was a flurry of interest recently in a lawsuit launched by some Facebook shareholders, who apparently believe that they got the short end of the stick in the company’s recent share restructuring. Here’s a news flash for them: You always had the short end of the stick.
The lawsuit relates to the changes that CEO Mark Zuckerberg made earlier this year, in which he issued a new class of stock that will allow him to maintain control over the company even if he sells or gives away most of his shares.
The plaintiffs argue this could be damaging to their interests, since their shares might drop in value. And the lawsuit alleges that Silicon Valley venture capitalist and board member Marc Andreessen was personally advising Zuckerberg, while also sitting on a supposedly impartial advisory committee overseeing the restructuring maneuver.
As titillating as it might be to read Andreessen’s text messages to Zuckerberg, however — in which the former quotes from a 1950’s movie with Burt Lancaster, and says “The cat’s in the bag and the bag’s in the river” — the whole thing feels like a bit of a sideshow.
Note: This was originally published at Fortune, where I was a senior writer from 2015 to 2017
The reality, for better or worse, is that Mark Zuckerberg can do whatever he wants with Facebook, because he controls more than 50% of the votes, thanks to the same kind of multi-voting shares that Larry Page and Sergey Brin use to control Google.
None of this is new. Zuckerberg has always controlled the company in this way. Is such multiple-voting control unfair? Arguably, yes. But those were the rules of the game before the shareholders bought their stock, which makes it difficult to claim that they are being hard done by now.