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Mark Zuckerberg Signed the Wrong Document

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Re: Mark Zuckerberg Signed the Wrong Document

#101

Post by balabaster »

k__ wrote: post #99
balabaster wrote: post #97

I'm not sure I fully understand this. Perhaps someone can explain. What the fuck does which piece of paper he signed change? If I understand this correctly, the bare facts are: 1). Zuckerberg is a director, this doesn't seem to be in dispute. 2). Zuckerberg makes up the shareholder majority with 60% of the shares, this also doesn't seem to be in dispute. 3). Zuckerberg believed that the salaries awarded to the board…

> 2). Zuckerberg makes up the shareholder majority with 60% of the shares, this also doesn't seem to be in dispute. Nope, he has 60% of the voting power, but not 60% of the shares. He simply owns shares that give him more votes per share. He isn't owning the majority of Facebook anymore, so he is considered a "regular" shareholder. But because of his voting power, he can act like he owns the place most of the time.

The result is the same, but thanks for that clarity. Your point clears up a misunderstanding I've had about how that works for a while.

Re: Mark Zuckerberg Signed the Wrong Document

#102

Post by k__ »

balabaster wrote: post #101
k__ wrote: post #99

Earlier quoted context omitted.

> 2). Zuckerberg makes up the shareholder majority with 60% of the shares, this also doesn't seem to be in dispute. Nope, he has 60% of the voting power, but not 60% of the shares. He simply owns shares that give him more votes per share. He isn't owning the majority of Facebook anymore, so he is considered a "regular" shareholder. But because of his voting power, he can act like he owns the place most of the time.

The result is the same, but thanks for that clarity. Your point clears up a misunderstanding I've had about how that works for a while.

The difference is:

If he owns >50% of the company, no one can sue him over this matter, because there is no way that >50% of the shareholders have a different opinion about payment.

AFAIK he owns 80% of shareholders who can have a different opinion about payment.

Re: Mark Zuckerberg Signed the Wrong Document

#103

Post by [deleted] »

downandout wrote: post #57

The "investors" suing are just working with/for attorneys that extort massive legal fees and damages from public companies for a living. This case has nothing to do with the underlying conduct, which was merely a clerical error. These attorneys are one of the big reasons that unicorns are staying private. The most famous of these bottom-feeding attorneys, Bill Lerach, built an estimated net worth of $700 million [1]…

[deleted]

Re: Mark Zuckerberg Signed the Wrong Document

#104

Post by gamblor956 »

k__ wrote: post #102
balabaster wrote: post #101

Earlier quoted context omitted.

The result is the same, but thanks for that clarity. Your point clears up a misunderstanding I've had about how that works for a while.

The difference is: If he owns >50% of the company, no one can sue him over this matter, because there is no way that >50% of the shareholders have a different opinion about payment. AFAIK he owns 80% of shareholders who can have a different opinion about payment.

Key term: "disinterested majority"

In this case Zuck could not be part of the disinterested majority since it was his salary up for vote. Consequently, his shares (and the accompanying votes) should have been ignored.

Re: Mark Zuckerberg Signed the Wrong Document

#105

Post by hyperpape »

michaelt wrote: post #86
jegutman wrote: post #45

Earlier quoted context omitted.

The structure of the company gives you the right to future dividends at the same rate as other classes of stock. So as long as they think they're creating something of value and the marketplace does you own an equal equity share of that entity. Google finally paid a dividend (although a one-time dividend) and also announced a stock buyback so these companies may start returning capital. As of right now facebook think…

Bottom line, you have the same rights to payments per share as Zuckerberg. Also technically Zuckerberg will at some point (might be 30-50 years from now) start divesting his shares Why would he issue a dividend, where he has to share the money with other shareholders, when he could approve himself a bonus, and not have to share the money with anyone?

I'm not sure if issuing himself a sufficiently large bonus to compete with the value of his shares is feasible. And giving yourself a billion dollar bonus probably does not inspire confidence in the stock markets. He'd probably end up losing as much in stock value as he gained in the bonus.

Re: Mark Zuckerberg Signed the Wrong Document

#106

Post by downandout »

forgetsusername wrote: post #84
downandout wrote: post #72

Earlier quoted context omitted.

To be sure, his work was a mixed bag. His firm ran the shareholder case against Enron, which clearly was not baseless litigation (his personal share of the legal fees awarded in that case alone was rumored to be $80 million). However, having read a few things about him, the majority of the cases he brought were designed to extort quick settlements out of the companies. He was/is reviled by corporate America, and he p…

> his personal share of the legal fees awarded in that case alone was rumored to be $80 million Why do you feel the need to point out how much Mr. Lerach earns or is worth in your discussion? What is the relevance? You realize the Facebook Board of Directors has 8 billionaires on it, right?

It's relevant because his entire scheme was fueled by personal greed. It also displays the scale at which he operated and the reason that he is a notable example of the kinds of lawyers bringing this type of litigation.

As to the greed factor, he invented plaintiffs in 150 cases - in fact he used the same paid plaintiff in over 70 cases. He knew he was breaking the law by doing this and simply didn't care because there was money to be made. In the video I referenced, it explains that he was only caught because it just so happened that this particular plaintiff got caught in a $17 million insurance scam involving the staged theft of some rare art. When he was caught, he rolled over on Lerach.

He employed criminals to extort companies and made hundreds of millions of dollars doing it. His actions were seen as so repugnant that the federal government passed a tort reform law that many Congressional staffers referred to as the "Get Lerach Act," although the law unintentionally added jet fuel to his business. The whole thing just smacks of seedy, greedy criminals (Lerach among them) that were out to soak companies for every dime they could get.

Re: Mark Zuckerberg Signed the Wrong Document

#107

Post by Kalium »

arethuza wrote: post #83
wolf550e wrote: post #80

Earlier quoted context omitted.

Patent trolling is extortion, isn't it?

Actually, that's a good example - thanks. I guess you could argue that problem is how silly patents are though rather than the problem being with the court system itself.

It's a good example because even if you know you can win to a high degree of certainty, the cost of fighting is much higher than the cost of settling. This applies to a great many kinds of litigation. Patents are not special in this regard, just a clear example.

Re: Mark Zuckerberg Signed the Wrong Document

#108

Post by teachingaway »

balabaster wrote: post #97

I'm not sure I fully understand this. Perhaps someone can explain. What the fuck does which piece of paper he signed change? If I understand this correctly, the bare facts are: 1). Zuckerberg is a director, this doesn't seem to be in dispute. 2). Zuckerberg makes up the shareholder majority with 60% of the shares, this also doesn't seem to be in dispute. 3). Zuckerberg believed that the salaries awarded to the board…

I think the answer is this: the law requires the exact document - a shareholder consent. It's binary. Either you have the consent or your don't. The judges don't want to be bothered with shades of gray. Allowing an exception for docs that are "close enough" would lead to long and expensive arguments about whether something was "close enough" or not.

Sure, the rule is harsh, but there's an upside. You can look at a corporate doc and know right away whether it's sufficient. No debate. It's either 100% correct, or else it doesn't pass muster.

On balance, is it a good rule? I don't know! It's just one way to write a rule, and there are some upsides (certainty) and downsides (harsh results for a clerical error).

Re: Mark Zuckerberg Signed the Wrong Document

#109

Post by downandout »

forgetsusername wrote: post #81
downandout wrote: post #57

The "investors" suing are just working with/for attorneys that extort massive legal fees and damages from public companies for a living. This case has nothing to do with the underlying conduct, which was merely a clerical error. These attorneys are one of the big reasons that unicorns are staying private. The most famous of these bottom-feeding attorneys, Bill Lerach, built an estimated net worth of $700 million [1]…

> "which was merely a clerical error." It was likely a clerical error, in this instance. But that was only after discovered after the law suit. Should we give these corporate boards the benefit of the doubt? That's funny. > by creating exactly these kinds of nonsensical shareholder lawsuits against public companies It isn't "non-sensical". There are rules and laws that govern public companies, and public companies ar…

>I'm sure Facebook and Mr. Zuckerberg will learn a lesson to be more diligent in such matters. That's the point.

The point is to be awarded millions of dollars in legal fees, which they will undoubtedly receive.

Re: Mark Zuckerberg Signed the Wrong Document

#110

Post by TheCoelacanth »

gamblor956 wrote: post #104
k__ wrote: post #102

Earlier quoted context omitted.

The difference is: If he owns >50% of the company, no one can sue him over this matter, because there is no way that >50% of the shareholders have a different opinion about payment. AFAIK he owns 80% of shareholders who can have a different opinion about payment.

Key term: "disinterested majority" In this case Zuck could not be part of the disinterested majority since it was his salary up for vote. Consequently, his shares (and the accompanying votes) should have been ignored.

The article says that the vote only concerned the salaries of the six directors who are not employed by Facebook in some other capacity, so Zuckerberg wasn't voting on his own salary.
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