Zuckerberg and Murdoch rock air-governance shows
By Richard Beales
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Mark Zuckerberg and Rupert Murdoch breezed through their latest air-governance shows. Facebook on Tuesday held its first annual meeting as a public company while News Corp shareholders on the same day agreed to split the company. Both may have served the greater good this time, but when founders dominate the voting, as in these two cases, it’s not a given.
Thanks to super-voting Class B stock, Zuckerberg directly controls 54 percent of Facebook votes. Add those he casts for others, and the tally rises to 67 percent. Items on the social network’s proxy – electing directors, two non-binding ballots relating to executive pay, and the appointment of accountants – were hardly controversial, coming so soon after its market debut last year. Even if they had been, though, there was no danger of meaningful dissent. A few shareholders griped about the share price, down nearly 40 percent since the IPO, but that was about it.
At News Corp, it’s a little more complicated. There, Murdoch controls 39 percent of the Class B voting stock – enough to make most things happen. Holders of non-voting Class A shares actually do get a say on certain things, too. In this case, the split of News Corp into a media and entertainment group and a newspaper-led business benefits all – the company’s stock is up 66 percent over the last year, helping it to outpace Disney’s and Viacom’s. But Murdoch’s imperialism has inflicted plenty of damage, too, including overpaying for Dow Jones and presiding over the phone hacking scandal in the UK.
It’s hard to begrudge company founders a say in the future. But clinging to control through super-voting shares, rather than by retaining a big economic interest, is a cop-out – not to mention questionable governance.
The two mostly symbolic sets of votes on Tuesday provide a useful reminder for investors. They may be owners of News Corp, with its history of sometimes rough treatment, or of Facebook, where Zuckerberg has not yet had much time for his interests to diverge from other investors despite early signs of unilateral decision-making with the Instagram acquisition. Or they might hold shares of any other company with similar structures like, say, Google. In all these cases, they have little real say. For the most part, they are merely along for the ride.