Newly unsealed court documents from a shareholder lawsuit today reported on by Bloomberg describe how Facebook founder Mark Zuckerberg and investor Marc Andreessen allegedly conspired to help Zuckerberg retain power over the company.
A little context: Earlier this year, Facebook CEO Mark Zuckerberg proposed creating a new class of stock, one that would effectively allow him to retain voting power over his kingdom, but also allow him to sell shares in order to fund philanthropic pursuits. Some worried that the maneuver would lessen the value of their shares.
Nevertheless, the proposal passed. In an effort to protect minority shareholders, however, Bloomberg reports, “Facebook’s board set up a special committee, choosing the three directors who were least beholden to Zuckerberg or financially affected by the decision — Susan Desmond-Hellmann, Marc Andreessen and Erskine Bowles — to represent shareholders while weighing the matter.”
One problem: Andreessen and Zuckerberg are close buddies, and throughout the process, Andreessen apparently tipped Zuckerberg off to shareholder concerns in order to help Zuck argue against them.
During one meeting Andreessen texted feedback like “This line of argument is not helping. ☺” and “NOW WE’RE COOKING WITH GAS.” The texts, cited in the lawsuit, would seem to demonstrate that Andreessen was less concerned with protecting minority shareholders than he was with protecting Zuckerberg. For him, the whole thing was a fun spy mission: “The cat’s in the bag and the bag’s in the river,” he told Zuckerberg. Zuckerberg, confused, asked if the cat was dead.
Maybe most interesting of all is a small detail buried in the Bloomberg report: As part of the stock reclassification, Zuckerberg also wanted another worrying clause — the ability to serve in government for two years without losing control of his company. In the end, even that proposal managed to make it into the final product. The stock reclassification and corporate reshuffling passed the board and shareholder vote. It is now on hold pending the lawsuit.
