I always thought it was weird that it was possible for someone to be both an executive at a company and have a seat on the board. I know this is a common thing in the tech industry, it just seems weird to me. In theory the board exists to provide oversight of the executives on behalf of the shareholders, so having the CEO on the board is a natural conflict of interest.
It isn't really a conflict. The board exists to protect the shareholders' value in the business, and Mark Zuckerberg is the biggest shareholder (by far). It doesn't usually happen in other industries because it is rare for the biggest owner to be in operating control of the business.
I see nothing wrong with this. When people bought stock in startup IPO like FB, the core reason is the founder and his vision. There are too many examples in history where shortsighted investors have booted out founder to milk the company and through leftover to vultures. I would prefer founder to be protected from this ups and downs.
Here's bit of context:
Heavily influenced by Facebook’s first president, Sean Parker, they set up Facebook so Mr. Zuckerberg controlled not one, but two board seats. Mr. Parker had been ousted — twice — out of his own companies and was determined not to let the same happen to Facebook’s founder. When Mr. Parker left the company, he gave control of his seat to Mr. Zuckerberg, giving him control of three board seats out of five.
“That solidified Mark’s position as the sort of hereditary king of Facebook,” said Parker in The Facebook Effect by David Kirkpatrick. “I refer to Facebook as a family business. Mark and his heirs will control Facebook in perpetuity.”
Well yes, because he owns more than 50% of the voting stock. That’s how ownership works. This isn’t “Facebook has a rule that says the ceo is replaced by his child”, it’s a matter of “Facebook ceo owns more than 50% of voting stock, and is leaving it to his family”. Feudal is: irrespective of ownership, control is hereditary. (Monarchies generally don’t own more than 50% of the assets in a country)
The alternative would be to prohibit leaving assets to your family in your will.
