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Facebook's (FB) IPO filing opens by saying: "our mission is to make the world more open and connected."
That makes its CEO, Mark Zuckerberg, a Missionary-In-Chief.
It's a noble goal. And it's followed by lots of talk about how the company is more motivated by this social purpose, than a profit motive.
For example, from Mark's letter, he says:
Facebook was not originally created to be a company. It was built to accomplish a social mission — to make the world more open and connected.... Today, our society has reached another tipping point. We live at a moment when the majority of people in the world have access to the internet or mobile phones — the raw tools necessary to start sharing what they’re thinking, feeling and doing with whomever they want. Facebook aspires to build the services that give people the power to share and help them once again transform many of our core institutions and industries.
He goes on to discuss how he hopes Facebook will create more open "governments and social institutions":
We believe building tools to help people share can bring a more honest and transparent dialogue around government that could lead to more direct empowerment of people, more accountability for officials and better solutions to some of the biggest problems of our time.
Finally, he proudly discusses how Facebook has defined its own organizational culture to take inspiration from the "Hacker Way":
Hacker culture is also extremely open and meritocratic. Hackers believe that the best idea and implementation should always win — not the person who is best at lobbying for an idea or the person who manages the most people.
It sounds great and very noble.
That's why it's slightly ironic, given the highfalutin language, why Facebook has one of the most Soviet-style closed corporate governance systems seen from a public company in at least a decade.
In Facebook's S-1, we learned that Facebook elected to be a "controlled company" under corporate governance rules for publicly-listed companies. This means:
- They don't need to have independent directors - as other companies are.
- They are not required to have a compensation committee. Mark can do this himself if he wishes.
- They are not required to have an independent nominating committee for proposing new directors. Mark can pick 'em.
- Zuck has effective control of the company forever through his 57% voting stake and the right to appoint his successor from the grave.
- They have a classified board.
- They can select the jurisdiction for any shareholders who choose to bring a lawsuit against the company.
To be fair, if you don't think Steve Jobs (or any CEO) didn't give tacit approval for any new director, you're being naive. As much as I'm in favor of strong corporate governance, I'm smart enough to realize that corporate governance rules are written to have loopholes as large as the tax code. In Silicon Valley, paranoia around maintaining fervent control is even higher than other industries.
You can argue that it hasn't hurt Apple (AAPL) shareholders. It's debatable about other companies.
Nobody complained about Research In Motion's (RIMM) board for 15 years until the company lost 70% of its value last year.
That's the thing about corporate governance - nobody cares about it until it's too late. And then everyone asks who was minding the store.
But Zuck's words and actions are, at best, ironic, and, at worst, highly hypocritical.
I am sure that Facebook employees (especially from 2007 or earlier) are indifferent to this issue. they just want to get paid over the next year. But I guarantee you that every one of the 3,200 employees is aware of the irony between Zuck's "Hacker Way" promoting meritocracy and the hard reality that it's Zuck's way or the highway.
[Long AAPL]
