Mark Zuckerberg defies critics with latest Meta board member
Mark Zuckerberg appears to be sending a message with the latest addition to Meta’s board: The company is going to keep doing things his way — activists, politicians and concerned shareholders be damned.
Zuckerberg’s company said last week that Tony Xu, the co-founder and CEO of unprofitable food delivery giant DoorDash, would become the newest member of its 10-person board of directors.
Xu and Zuckerberg have much in common: They’re both 37-year-old billionaires, they’ve both crafted ownership structures that give them an unusual degree of control over their own companies — and they’re both willing to burn vast sums of money to fight their political enemies.
“They’re birds of a feather,” Melanie Sloan, a government and corporate ethics attorney, told The Post.
In a typical publicly traded company, shareholders can vote out a CEO during a time of crisis — like when Instagram was caught pushing eating disorder pictures to teen girls, or DoorDash was accused of pocketing tips that customers thought were going to delivery workers.
But Zuckerberg and Xu are essentially immune from such crises because of a mechanism called dual-class shares, which generally assign more votes to stock owned by founders than that held by members of the public. That system means Zuckerberg controls about 58% of all votes at Meta, while Xu and his two co-founders control about three-quarters of all votes at DoorDash.
“No matter how many shareholders Facebook may have, they will never be able to outvote Mark Zuckerberg,” Sloan said.
Sloan said that Zuckerberg’s selection of Xu, another founder with near-complete control of his own firm, shows he doesn’t plan to give up any power in the future — no matter how many critics like Facebook whistleblower Frances Haugen and hordes of angry lawmakers on Capitol Hill may complain.
“You’ve just put somebody who is intent on maintaining total control of his company onto the board of another company with another founder who wants to maintain total control of his own,” Sloan said.
Proponents of founder control and dual-class shares argue that empowering successful founders like Zuckerberg and Xu is not an issue since they build the companies in the first place.
Zuckerberg’s move is unsurprising because founders across Silicon Valley are increasingly keeping an iron grip on their companies even when they go public, according to University of Florida finance professor Jay Ritter, who studies corporate governance and tech IPOs.
A whopping 46.2% of tech companies that went public in 2021 used dual-class share structures — an all-time high and more than double the percentage over just five years ago, according to Ritter’s research.
“Dual-class shares have definitely become more common,” Ritter told The Post. “I’m sure Zuckerberg would not have invited somebody onto the board who’s a vocal opponent of dual class shares and founder control, but I don’t think that’s something that would rule out a huge number of potential board numbers.”
In addition, Xu’s appointment could help Meta satisfy a recently passed California law that requires corporate boards to include some directors from minority groups, Ritter said.
The DoorDash CEO could also teach Zuckerberg a thing or two about defeating pesky politicians and activists.
In 2020, DoorDash joined with other “gig economy” companies like Uber, Lyft and Instacart to push Proposition 22, a California ballot initiative that made it easier for the firms to deny basic benefits like sick pay and minimum wage to delivery workers by counting them as contractors rather than employees. The companies spent $200 million blanketing the state in ads supporting the effort, which passed with 58.6% of the vote despite the objections of Joe Biden, labor unions and legions of activists.
As Meta seeks to stave off politicians on both sides of the aisle who want to regulate the company, the lessons Xu learned pushing Prop 22 could help an increasingly defiant Zuckerberg mobilize voters against his enemies.
DoorDash declined to comment on the record for the story. Facebook referred The Post to a press release announcing the appointment in which Zuckerberg said that Xu had “direct experience both running a tech company and solving complex challenges in commerce.”