Chicago Business Litigation Lawyer Blog
In one of our previous blog posts, we looked into what Facebook was doing with the data of millions of users and profiting from it. The CEO of Facebook, Mark Zuckerburg, was subject to scrutiny in his testimony and angered both users and shareholders. Since the Cambridge Analytica scandal, Facebook has also been accused of meddling in the elections by having a Mercer backed political data firm collect information as well.
Zuckerberg later confessed that he made mistakes and that did not know how to handle a large company. This has led to the undermining of public confidence in him, including that of the shareholders. So now a possibility of removal from a chairman position and being replaced as an independent executive is talk that is being touted. A dual structure system of shares allows for the usurpation of power. Too much power in his hands is now deemed unacceptable. Activists are also calling for his removal. The Investment company has gone so far as to file a proposal to oust him. The main changes that are most likely include the creation of a role division between a chairman and CEO. That leads to a greater check on the power that he holds which is more than 60 percent of a voting share. A dual role weakens management of the board and is what currently is in place. This is one of the reasons cited as being a contributing factor in the mishandling of the Facebook controversies.
Separating a chair and a CEO also reduces conflict. Shareholders are unable to check the founder’s power because he owns 60 percent of the company and occupies the two highest positions. As it stands, Facebook stock is of two types and the ones that Zuckerberg owns have 10 times a greater voting power. “When you open yourself up to more opinions, more independent voices, you’re more likely to make better decisions. It’s more likely that someone with independent governance would have spoken up about some of these things,” Illinois State Treasurer Michael Frerichs, who has $35 million invested in Facebook, told Business Insider.
In addition, General Data Protection Regulation also stipulates that companies need to have had requested consent from their users. Where there is no consent for advertising purposes, they can be fined up to four per cent of their revenue on a global scale. That is why one of the major changes Facebook now seeks to do is by asking its users to review the information that they consent to be used. Whether or not users understand that this is for compliance purposes is another issue. Either way, many users have been scared to use the platform in the face of the controversies that surround it. Monetarily, there has been much loss in its market value and now that Infowars and Fox News are now able to participate has many more skeptical of this form of social media. Facebook shares have been affected by an estimated decrease of $150 billion of its market value. Zuckerberg also suffered from him losing approximately $20 billion.
https://www.vanityfair.com/news/2018/06/could-mark-zuckerberg-face-a-coup-detat-at-facebook
https://www.bizjournals.com/sanjose/news/2018/06/26/facebook-shareholder-revolt-zuckerberg-chairman-fb.htmlSuper Lawyers named Evanston and Skokie Illinois closely held corporation law trial attorney Peter Lubin a Super Lawyer and Illinois business dispute attorneys Patrick Austermuehle and Andrew Murphy Rising Stars in the Categories of Class Action, Business Litigation, and Consumer Rights Litigation. Lubin Austermuehle’s Illinois business trial lawyers have over thirty years of experience in litigating complex business disputes, shareholder freeze-outs, and squeeze-outs, breach of fiduciary duty and partnership dispute claims and many different types of business and commercial litigation disputes. Our DuPage and Kane County business dispute lawyers, civil litigation lawyers, and copyright attorneys handle emergency business lawsuits involving injunctions disputes involving shareholders, partnerships, closely held businesses and employee breaches of fiduciary duty. We also assist businesses and business owners who are victims of fraud. You can contact us by calling at 630-333-0333. You can also contact us online here.