Zuckerberg could run Facebook while serving in government forever
Mark Zuckerberg is not limited to just two years working in the government while still controlling Facebook, as has been widely misreported. A closer examination of SEC documents reveals Zuck only needs to still own enough Facebook stock or have the board’s approval to be allowed to serve in government indefinitely.
Combined with Zuckerberg’s announcement yesterday that his 2017 personal challenge is to meet and listen to people in all 50 states, this fact lends weight to the idea that Zuckerberg may be serious about diving into politics.
Without the limit, Zuckerberg has the opportunity to be appointed or elected to a more significant office and have as much time as he wants to make an impact, rather than just dipping in potentially as a cabinet member whose terms typically last less than two years.
Of course, getting elected would require the faith of the people which has been shaken by the fake news scandal. Some would surely view a role in government as a selfish push for power despite Zuckerberg’s massive philanthropy initiatives. Certain government offices might have historically required him to give up control of Facebook, but Donald Trump is currently redefining how much ownership of business one can have as President
The confusion arose from Bloomberg’s interpretation of unsealed court filings regarding correspondence between Zuckerberg and Facebook board member Marc Andreessen. They secretly texted about how to convince other board members to approve the creation of Class C non-voting shares that would allow Zuckerberg to retain voting control of Facebook as he donates the majority of his wealth to his and his wife’s philanthropic vehicle, the Chan Zuckerberg Initiative.
As part of the negotiation, Zuckerberg agreed to several ways for Facebook to “mitigate succession risk” — essentially avoid Zuckerberg and his estate retaining total control thanks to his 10-votes-per-share Class B stock in case he dies, becomes disabled, is fired, or voluntarily resigns and leaves the company. In these cases, his stock converts into single-vote Class A shares so that Facebook could attract a higher quality replacement CEO since an absent Zuckerberg wouldn’t still control the company.
But Zuckerberg fought for a big exception to the resignation “sunset trigger”: he may voluntarily resign or take a leave of absence while still maintaining voting control of Facebook if he’s going to work in government. The only limits on this are that he must either:
- Still own 30% or more of the Facebook capital shares he did when signing this agreement in June and discuss joining government with Facebook’s independent directors
- Own less than 30% but either receive approval from the majority of Facebook’s independent directors or serve for less than two years
A Facebook spokesperson verified this interpretation. You can read the whole passage of legalese describing this here.
Mr. Zuckerberg’s leave of absence or resignation would not constitute a Voluntary Resignation if it were in connection with his serving in a government position or office and if, at the time of such leave or resignation, Mr. Zuckerberg owns (i) 30% or more of the shares of our capital stock that he owned as of the date that we enter into the Founder Agreement with Mr. Zuckerberg (Founder Agreement Effective Date), Mr. Zuckerberg has discussed such leave or resignation with our independent directors or (b) less than 30% of the shares of our capital stock that he owned as of the Founder Agreement Effective Date, such leave or resignation has been approved by a majority of our independent directors or the duration of serving in the government position or office was limited to two years.
With this cleared up, Zuckerberg’s potential to make changes through government service, not just software, comes into focus. He’s talked at length abut how he sees Facebook as a town square that offers a platform for diverse voices while retaining civility.
From one perspective, that actually makes Facebook quite like a government already. And now Zuckerberg is planning nation-wide empathy tour stops to hear from the people directly. He wrote yesterday “My work is about connecting the world and giving everyone a voice. I want to personally hear more of those voices this year.” The challenge doesn’t sound far from a campaign tour of shaking hands and kissing babies. And a domestic tour fits nicely after he spent the past few years traveling the world and meeting heads of state from India, Brazil, Japan, and other countries.
Many have speculated that Facebook COO Sheryl Sandberg might eventually go into government. Now it’s clear that Zuckerberg’s ambitions to reshape the world through politics are even grander than would fit in a two-year term. He’s already the defacto president of a tumultous but thriving 1.8 billion-citizen online nation. Could he successfully lend a hand with a 320 million-citizen physical one?