Mark Zuckerberg’s absolute power in Meta: Investors criticize CEO unintentionally for deciding everything by himself, shareholder meetings are just formal

Several major Meta shareholders are venting their anger at management after the group’s announcement of increased metaverse construction shocked Wall Street. Despite a long slide that wiped out 74% of Meta’s stock price in more than a year, investors and board members recently said no one can stop chief executive Mark Zuckerberg from taking advantage of his power. operate and continue to bet on the virtual universe.

Last week, Meta stock fell 25% in Thursday trading, shortly after the group warned that losses from Reality Labs, a division that builds the metaverse, would increase “significantly” in 2023. Investors were also startled by the announcement of Meta’s $39 billion spending next year, which is twice as high as in 2021.

“ If this situation happens to other companies, investors will definitely write letters and propose a replacement for the director. I think Mark understands very well what investors want, but still makes his decisions, ” said Jim Tierney, chief growth investment officer at AllianceBerntein, a Meta shareholder.

Anger has spread to board meetings, where Zuckerberg attends in private, since Meta rocked Wall Street with his massive spending plans. The Financial Times quoted an expert as saying: “ It seems that investor frustration is higher than ever .”

“ When people call back to get feedback from Meta, they feel more terror than relief ,” says Jim Tierney.

According to David Older, head of equities at Carmignac, a management company with stakes in Amazon, Microsoft and Google: “ Zuckerberg was unknowingly with the investment community. The time spent in the metaverse extended. I’m not sure if it’s the right move in five or 10 years .”

However, when asked how investors feel about anger, Meta said: “ We value their opinions and regularly attend meetings to make sure we don’t miss any points of view. which “.

Like many other companies, Meta regularly holds internal meetings after quarterly earnings reports. This is seen as a form of appeasement for shareholders, because Zuckerberg’s complete control can help him ignore everyone’s point of view.

Meta stated that it would not comment further on this matter, but affirmed that ” Meta management team, together with the supervision of the Board of Directors, will focus on implementing priority policies to create long-term value for customers. shareholders ”.

The frustration of Meta shareholders has grown in recent years as they find themselves at the center of endless squabbles over privacy violations, misinformation, or big bets. into the metaverse. The proposal to eliminate preferred shares received 28% of the vote at the annual shareholder meeting earlier this year, but it also did not solve anything because Zuckerberg is the person with the highest authority.

“ With the metaverse, there is so much skepticism. Zuckerberg and the development team, as a corporation, are facing unprecedented challenges ,” said Dan Ives, a veteran Wall Street technology analyst.

Legally, Meta directors have a responsibility to represent all shareholders, even if Mark Zuckerberg controls who is elected to the board, according to Steve Diamond, a governance expert at the University of California. Santa Clara school. Courts can intervene if the board is found to be “wasting” human resources.

“ I am amazed at the amount of money Meta spends on the metaverse. If Mark Zuckerberg had only 1% of the shares, he would have gone a long time ago ,” Steve Diamond said.

This led shareholders to turn to a conciliatory approach. In a letter to Meta directors, Brad Gerstner, of Altimeter Capital, tried to attract attention by praising Meta’s business, then urging the company to cut at least 20% of its staff. members and save $5 billion on the budget.

“ We think the advice above will help Meta become a more productive and focused company, one that will regain investor confidence and motivation .”

“ Everybody agrees with Brad Gerstner’s letter to Zuckerberg ,” said one shareholder. “ You can be a major shareholder and still invest $5 billion a year in the metaverse, but you have to be disciplined .”

However, in a recent meeting, Meta executives tried to explain to shareholders, that 82% of the third quarter budget was for existing services rather than the metaverse.

For some technology investors, Apple’s restriction of the data it collects on its devices has had a severe impact on Meta’s ad revenue. This leaves Mark Zuckerberg with no choice but to try to build and strengthen the foundation.

“ If this is an old style of governance, the controversy will be endless ,” said one analyst.

According to FT, much of the unhappiness stems from the fact that Meta did not provide a specific timeline for spending momentum in the metaverse.

“ They spend $15 billion/year on the metaverse but don’t give us any information on the bounds. It’s just too big of an ambition ,” complained one shareholder.

“ Stakeholders are confused by the meaning of the metaverse ,” writes Brad Gerstner. ” If the company only invested 1-2 billion USD/year on this project, it wouldn’t be a big deal .”

By: Financial times, Bloomberg