The scandal around Facebook’s privacy practices and the way that it protects its users data – now under official investigation for possibly violating US federal securities laws – brings into question the way that the company is run. In particular, the fact that its founder, Mark Zuckerberg, owns approximately 16% of Facebook but commands 60% of its voting power via a special type of shares.
Facebook is not alone in this respect. There appears to be a trend among newly-listed, mostly high-growth, firms to have these corporate governance structures that provide shareholders with weak rights when it comes to running the company. The dual class share structure, as in Facebook’s case, is only one of several measures to ensure that the founding member team remains in power.