Stepping down as chairman will throw a bone to angry shareholders, yet leave him in control of the $40 billion company he created in a Harvard dorm.
- The New York Times exposé on Facebook's crisis management exposes a spectacular failure in leadership from CEO Mark Zuckerberg.
- The report suggests he was at best uninterested in some of the scandals that engulfed his company, and at worst, complicit in exacerbating them.
- It's red meat to powerful investors who want to oust Zuckerberg as chairman.
- Stepping down as chairman would allow him to acknowledge his failings, throw a bone to Facebook's critics, and still maintain control of the firm he built.
If you haven't read The New York Times' blockbuster 6,000-word opus on how Facebook has dealt with a sequence of scandals, it's a worthwhile investment of your time.
Based on interviews with 50 people, it is rich with devastating anecdotes and mini-scandals. In its own right, the black-ops mission to cast George Soros as the puppetmaster behind an anti-Facebook movement is startling and disturbing.
But overall, the impression I took away was one of a spectacular failure in leadership. And in this sense, all roads lead to CEO and Chairman Mark Zuckerberg.
The Times portrays Zuckerberg as, at best, uninterested in some of the existential issues that have threatened Facebook over the past three years, and at worst, complicit in exacerbating them.
On the former, the report said Zuckerberg, and his right-hand woman Sheryl Sandberg, were "distracted by personal projects" as Facebook was dragged into danger.
As evidence of Russian meddling mounted last year, Zuckerberg was on "listening tour." It was also said he prefers to focus on "broader technology issues," leaving the politics to Sandberg.
In Zuckerberg's defence, Facebook said on Thursday that he and Sandberg were "deeply involved in the fight against false news and information operations on Facebook."
And as far as making things worse, well there's an anecdote about him misjudging the anger against his social network in a clumsy conversation with Republican Congressman Greg Walden.
But something else stood out — and it speaks volumes about Zuckerberg deals with crisis. In the heat of the Cambridge Analytica data debacle, Facebook was criticised by Apple CEO Tim Cook. Instead of taking on the chin, Zuckerberg was reportedly riled.
"Mr. Cook's criticisms infuriated Mr. Zuckerberg, who later ordered his management team to use only Android phones — arguing that the operating system had far more users than Apple's," the Times said.
It smacks of petulance at a time when Facebook needed reasoned responsibility. (Facebook said in response to the Times report that it has "long encouraged our employees and executives to use Android.")
Zuckerberg's failures are red meat for furious investors
All of this is red meat to growing cabal of angry investors, who want Zuckerberg gone as chairman.
Business Insider has spoken several times to activist shareholders, with holdings worth more than $3 billion. They believe Zuckerberg's feet need to held to the flames by an independent chairman.
"He is not accountable to anyone, not the board or the shareholders, which is a bad corporate governance practice," one told me. "He's his own boss, and it has clearly not been working."
A proposal to oust him as chairman was put forward last year. Analysis has shown that it was supported by 51% of independent investors at the annual shareholder meeting. There is now a fresh proposal to split Zuckerberg's dual role, which will be voted on at next year's shareholder meeting. It is already gathering support.
Facebook has consistently brushed off these demands. It has said an independent chairman would create "uncertainty, confusion, and inefficiency." This is despite this governance mechanism functioning pretty smoothly at other tech companies, including Apple, Twitter, and Microsoft.
And there's one element of the Times' story that underlines the value of independent oversight. It features board member Erskine Bowles, the chair of Facebook's audit committee, conducting a foul-mouthed grilling of management on how the company allowed itself to become a tool for Russian interference.
Zuckerberg and Sandberg were stunned into action.
It's not like Zuckerberg is blind to Facebook's failings. He accepts the buck stops with him. "I designed the platform, so if someone’s going to get fired for this, it should be me," he told Recode earlier this year.
Stepping down as chairman will allow him to acknowledge his failings, throw a bone to angry shareholders and Facebook critics, and yet still keep control of the $40 billion company he created in his Harvard dorm room.
Source: BUSINESS INSIDER