Mark Zuckerberg's kung-fu grip on Facebook
Facebook filed for initial public offering Wednesday. Like bargain-hunters on Black Friday, investors and journalists alike rushed to scrutinize the company's prospectus. So many people took an interest that for a short while the Securities and Exchange Commission's website crashed.
A few revelations stood out in the 150 page document - many highlighting chief executive officer Mark Zuckerberg's control of Facebook.
It is worthy to note that the company does define these facts as risk factors for investors. One of the more interesting provisions states Zuckerberg retains the right to choose his successor upon his death.
"Mr. Zuckerberg has the ability to control the management and affairs of our company as a result of his position as our CEO and his ability to control the election of our directors. Additionally, in the event that Mr. Zuckerberg controls our company at the time of his death, control may be transferred to a person or entity that he designates as his successor."
On page 31 of the document, Zuckerberg's control over the company is stressed again.
"We have a dual class common stock structure, which provides Mr. Zuckerberg with the ability to control the outcome of matters requiring stockholder approval, even if he owns significantly less than a majority of the shares of our outstanding Class A and Class B common stock."
An anti-takeover provision states, "Mark Zuckerberg will effectively control all matters submitted to our stockholders for a vote, as well as the overall management and direction of our company, which will have the effect of delaying, deferring or discouraging another person from acquiring control of our company."
Zuckerberg is such an integral part of Facebook that losing him -- as well as chief operating officer Sheryl Sandberg -- is considered a risk factor.
