Global World Corporate Governance
Outline and Summarize of the Article
Nils Pratley on Finance 2018 article highlights that the World’s eighth largest company needs governance structure to provide better oversight than its founder. In his article, Nils Pratley focuses on Facebook board and explains why the board has to think and act past Mark Zuckerberg’s primary ideas for financial reforms efficiency (Pratley, 2018). Nils highlights the uncertainty surrounding Facebook’s future management. There is a doubt whether Facebook’s board has been discussing Mark Zuckerberg stepping down as chairman and leaving him as chief executive since Mr. Zuckerberg affirmed he is unaware of such as discussion. Student Sample: ORDER YOUR PAPER NOW
On Wednesday 4th April 2018, Mark Zuckerberg revealed that he was not aware of any discussions about his succession as the chairman. However, Nils states that it could probably remain safe to assume that Zuckerberg was aware of such discussions from his fellow directors. There have been calls for the appointment of an independent chair at Facebook, for instance from NY City’s pension scheme which are always ignored (Pratley, 2018). Personal data and information security are threatened due to Zuckerberg’s big blunders when handing FB users information.
In Nils’s article, the board is seen to have acknowledged Zuckerberg’s bizarre loose version of accountability. Recently, Mr. Zuckerberg committed a huge mistake of allowing private data of 87 million Facebook users to get “inappropriately shared” with Cambridge Analytics (Pratley, 2018). This was a great mistake that subverted his accountability as the board chairman. Abuse of users’ data must be brought to a halt.
The fact that Zuckerberg is running the world’s 8th largest company does not allow the board to ignore such mistakes and keep watching. Notably, $50 billion has been removed from Facebook’s stock market value in financial scandals leave alone personal privacy concerns and the influence of social media on democracy, and this provokes a regulatory backlash (Pratley, 2018).
Given these circumstances, the board feels there is no right corporate structure and this is driven by stakeholders interest. Nils states that the board must ensure that the company is not run at the whim of a chief executive who is plainly a technological whizz but accepts he failed in grasping FB’s responsibilities since users numbers rose to 2 billion (Pratley, 2018). Again, users, politicians, and advertisers demand a reassurance that the boardroom of FB undertakes basic checks and balances.
The article further explains the lack of corporate governance reforms at Facebook given Zuckerberg’s stranglehold over the company’s voting shares. The executive chair commands 60 percent voting shares and has a 16 percent economic interest in the company (Pratley, 2018). Practically, shifting these roles from him is impossible. Nils advice Scott Stringer (the NY City Comptroller) who has invested $1 billion pension fund in FB to keep pushing for the changes.
Stringer believes that Facebook must pursue a “reputation-enhancing second chapter” by appointing an independent chair, establishing an independent board committee, and hiring three external directors who are well versed than Zuckerberg in data and ethics complexities so as to enhance oversight role for data privacy policies and risks (Pratley, 2018). Next week, the US congregational committee will question Zuckerberg on the governance issue.
Discuss the corporate governance issues raised using corporate governance theories to illustrate the importance of these issues
According to Nils Pratley on Finance article, Mark Zuckerberg owns 16 percent of the company and controls 60 percent of voting power. There are various corporate governance issues raised…Continue Reading