--- title: A Facebook Lesson on How to Structure Company Ownership to Protect One’s Controlling Interest description: Facebook has taken a large decline to their stock value and struggles with it's leadership are only creating further problems for the company. Learn more about the struggles of business here. image: https://blog.goosmannlaw.com/hubfs/Facebook%20Stock%20Decline.png --- [![Goosman Lawfirm](https://blog.goosmannlaw.com/hs-fs/hubfs/Goosmannlaw%20October2017/images/Goosmann_Law_Firm_logo_4C-white.png?width=1250&name=Goosmann_Law_Firm_logo_4C-white.png "Goosman Lawfirm")](http://goosmannlaw.com/) - [COVID-19 Toolbox](https://goosmannlaw.com/covid-19-resource-toolbox/) - Our Team - [Attorneys](https://goosmannlaw.com/attorneys/) - [Non-Attorney Staff](https://http://goosmannlaw.com/non-attorney-staff/) - Practices & Industries - [Practices](https://goosmannlaw.com/practices/) - [Banking & Finance](https://goosmannlaw.com/banking-finance/) - [Bankruptcy, Restructuring & Workouts](https://goosmannlaw.com/bankruptcy-restructuring-workouts/) - [Business](https://goosmannlaw.com/business/) - [Divorce & Family Law](https://goosmannlaw.com/divorce-family-law/) - [Employment](https://goosmannlaw.com/employment-law/) - [Environmental, Health & Safety](https://goosmannlaw.com/health-safety/) - 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The 24% drop in the company’s publicly traded shares this week – occurring virtually overnight -appears to have resulted from a brutal Facebook second-quarter earnings update released on Wednesday, wiping as much as $148 billion off its value. Facebook’s controversial founder, Mark Zuckerberg, serves as both the company’s CEO and Board Chairman. There are now reports of shareholder rebellion as a result of the “Humpty Dumpty” Facebook wall appearing ready to collapse even further.  That includes a minority shareholder, Trillium, who seeks to have Zuckerberg removed from serving as board chair. Easier said than done!  It is argued that a CEO who also serves as the board chair can exert “excessive influence” on the Facebook board and its agenda, weakening the board’s oversight of management. By separating the chair and the CEO positions, conflict reduction will result as a more independent chair provides a clean separation of power between the CEO and the rest of the board. Recent news reports suggest Facebook's "mishandling" of various scandals are viewed as some of the reasons why the change is necessary. Crises linked to Facebook include meddling in the 2016 presidential election, Cambridge Analytica, and the recent situation in Myanmar, where the U.N. blames Facebook for spreading hatred against the Rohingya , a militant group domestically. While Facebook is the grand daddy of the social media phenomenon, it is now clearly under attack from within as well.  A proposal to oust Zuckerberg as chairman was put forward last year and rejected, despite 51% of independent investors voting in favor of the change. But how could that be? The answer lies in Facebook's dual-class share structure. Class B shares have 10 times the voting power of class A shares, and it just so happens that Zuckerberg owns more than 75% of class B stock. Ultimately, Zuckerberg owns 60% of Facebook’s voting shares. Hat’s off to the Zuckerberg legal team dating back to the time when his ownership interest in the social media darling company was set up. Zuckerberg’s ability to own more than half of the voting power at Facebook and, therefore, the ability to swat away investor proposals to restructure management control represents excellent legal planning on his part and that of his legal. As a result, any proposals to successfully change Zuckerberg’s dual role as CEO and board chair are extremely slim unless he should agree to do so.  Business owners who seek to protect their ownership interest in a company should pay close attention to the Facebook saga, and in so many ways, learn from Mark Zuckerberg’s ownership example. The story also illustrates why investing on the front end in excellent legal advice can pay dividends years later when confronted by co-owners seeking to divest an owner of his management influence and control. Visit our [Risky Business Blog](https://blog.goosmannlaw.com/risk-manager-on-your-side) for more insights to the business world. To help protect your business or learn more from one of our business attorneys, stop by our Sioux City, Sioux Falls, or Omaha offices today! Resources: [http://uk.businessinsider.com/facebook-stock-drops-20-plus-nightmare-earnings-call-2018-7?utm\_source=microsoft&utm\_medium=referral&utm\_term=windowsapp](http://uk.businessinsider.com/facebook-stock-drops-20-plus-nightmare-earnings-call-2018-7?utm_source=microsoft&utm_medium=referral&utm_term=windowsapp) [http://uk.businessinsider.com/facebooks-market-cap-falls-130-billion-q2-earnings-call-2018-7?utm\_source=microsoft&utm\_medium=referral&utm\_term=windowsapp](http://uk.businessinsider.com/facebooks-market-cap-falls-130-billion-q2-earnings-call-2018-7?utm_source=microsoft&utm_medium=referral&utm_term=windowsapp)  [http://uk.businessinsider.com/facebook-to-delete-fake-news-inciting-violence-after-crisis-in-myanmar-2018-7?utm\_source=microsoft&utm\_medium=referral&utm\_term=windowsapp](http://uk.businessinsider.com/facebook-to-delete-fake-news-inciting-violence-after-crisis-in-myanmar-2018-7?utm_source=microsoft&utm_medium=referral&utm_term=windowsapp) ### Select Different CTA for each Post from Blog Editor [![New Call-to-action](https://no-cache.hubspot.com/cta/default/489404/a8cefc17-3b9d-4de0-89cd-e60a64752422.png)](https://cta-redirect.hubspot.com/cta/redirect/489404/a8cefc17-3b9d-4de0-89cd-e60a64752422) ### Subscribe Our Blog Thanks for submission!! 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