- Despite growing pushback to Facebook's pivot to the metaverse, Mark Zuckerberg cannot be fired.
- Zuckerberg structured Meta so that he has total control of any decisions that affect the company.
Mark Zuckerberg isn't going anywhere at Meta.
Despite growing pushback to Facebook's multi-billion dollar metaverse gamble, Mark Zuckerberg structured his company in a way that makes it nearly impossible for him to leave his role as CEO unless he wanted to, making him one of the most powerful CEOs in Corporate America.
What is a dual-class structure?
Facebook, which is now Meta, has a dual-class structure, meaning that average shareholders own one type of stock, Class A, while Zuckerberg and a small circle of insiders hold another type, Class B.
Holders of Class B stock get 10 votes per share, while Class A holders only get one vote, meaning Zuckerberg and other Class B shareholders are essentially untouchable.
Zuckerberg alone owns 90% of the company's Class B stock, enough to maintain absolute control of the company by himself.
Investors aren't left with many choices
Traditionally, shareholders all get an equal say on issues that affect a company, meaning that each share receives only one vote, no matter who owns it.
However, that has never been the case at Zuckerberg's company.
Supporters of dual-class structures argue "that such control is desirable because it allows charismatic, visionary founders and entrepreneurs to execute their vision...without having to worry unduly about stock market performance," according to a 2018 CFA Institute report on the subject.
Jay Ritter, a finance professor at the University of Florida, said this logic applied to Meta's investors.
"Until this year, Facebook's stock had done very well, which is one of the reasons investors have been willing to buy shares with inferior voting rights," he said.
This year, the calculation changed. Many investors have grown frustrated with Zuckerberg's plans to spend, and likely lose, even more money inventing the metaverse, but they aren't left with many choices.
"Selling your shares is the only alternative," Ritter said.
Investors have increasingly done just that, pushing the shares lower: this year, Meta's stock is down more than 70%.
Meta isn't alone
But Meta isn't the only tech company that gives its insiders supervoting powers.
"In recent years, many tech company IPOs have used a dual-class structure," Ritter said. For example, both Google and Snap have a similar setup.
Ritter thinks Zuckerberg truly believes he's doing what's best for Meta shareholders by pivoting his company toward the metaverse.
"If he owns a lot of stock, he thinks he's doing the right strategy," Ritter said.
Most of Zuckerberg's wealth is tied up in Meta. According to the Bloomberg Billionaire Index, his net worth has been slashed by $81 billion so far this year.