Why Mark Zuckerberg Can’t Be Fired As Meta CEO

  • Despite mounting pressure over Facebook’s turn into the metaverse, Zuckerberg designed his company so that he is in full control of any major decision.
  • Meta is not the only company that gives some people this kind of prerogative: Google and Snap have similar structures.
  • Dual class actions have much to do with the above and this is what they are about.
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Mark Zuckerberg is not going anywhere. Despite growing opposition to the multibillion-dollar bet on the metaversethe CEO of Meta has structured his company in such a way that it is almost impossible for him to leave his role as CEO unless he wants to.

This makes him one of the most powerful CEOs on the entire planet.

What are dual class shares?

Meta is made up of dual-class shares, meaning regular shareholders own one class of shares, Class A, while Zuckerberg and a small circle of close associates own Class B.

Class B share holders have 10 votes per share, while Class A holders only have one vote, meaning Zuckerberg and other Class B shareholders are essentially untouchable.

Meta’s CEO owns 90% of the company’s Class B shares, enough to single-handedly hold the control of the company.

Investors do not have many options against the CEO of Meta

Typically, all shareholders have an equal say in matters affecting a company, meaning that each share receives only one vote, regardless of who owns it.

However, that has never been the case at Zuckerberg’s company.

Proponents of dual stock structures argue that in certain types of companies this is a desirable type of control because it allows charismatic and visionary founders and entrepreneurs to execute their vision without having to worry about the company’s immediate performance in the marketplace. securities, says a 2018 CFA Institute report on the subject.

Jay Ritter, a finance professor at the University of Florida, says this logic applies to Meta investors.

Until this year, Facebook stock had done very well on the stock market. This is one of the reasons why investors have been willing to buy shares with lower voting rights », he explains.

This year, the calculus has changed. Investors disagree with Zuckerberg’s decisions

Many investors have become frustrated with the Meta CEO’s plans to spend, and likely lose, even more money trying to create the metaverse from scratch. However, the truth is that they do not have many options at their fingertips.

“Selling your shares is the only alternative,” Ritter acknowledges.

The truth is that more and more have taken advantage of this option: this year, Meta shares have dropped more than 70%.

“In recent years, many tech IPOs have used dual class shares,” Ritter recalls. For example, both Google and Snapchat have similar structures.

Ritter thinks Zuckerberg really believes he’s doing what’s best for Meta shareholders by pivoting his company into the metaverse.

“Since he owns a lot of stock himself, there’s no question he thinks he’s following the right strategy,” explains Ritter.

Most of Zuckerberg’s wealth is tied to Meta. According to the index Bloomberg billionaires, their net worth is down by $81 billion in so far this year.

NOW READ: Meta will start a massive cut from Wednesday

ALSO READ: Mark Zuckerberg’s Wealth Has Decreased 68% Since Facebook Switched to Meta

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Why Mark Zuckerberg Can’t Be Fired As Meta CEO