Facebook CEO Mark Zuckerberg is only 31 years old. (AP Photo/Eric Risberg)
Buried deep in Facebook's latest proxy statement is a curious note about Mark Zuckerberg's future.
The 31-year-old Facebook cofounder and CEO is the sixth-richest person in the world and leader of an unstoppable social network/mobile ad empire. But does Zuckerberg aspire to more? A potential hint of that appeared yesterday, when Facebook proposed changes to its stock structure, creating a whole new class of non-voting shares that would allow Zuckerberg to donate and invest his fortune without losing control of his company.
The new class of stock is intended to cement Zuckerberg's majority control over Facebook in the long run, and it includes protections that would revert his supervoting shares into regular shares in case of his death, disability, or departure from the company. Thus Facebook has created an incentive for him to stay in the leadership role where he has been so successful. But there's a loophole--one way that Zuckerberg can leave Facebook voluntarily and still retain control.
He can serve in a "government position or office" (from the proxy):
Moreover, the New Certificate provides that all shares of Class B common stock will automatically convert into Class A common stock on the date that is (i) the third anniversary of the death of Mr. Zuckerberg or a Disability Event, if such Disability Event is continuing as of such anniversary date and (ii) one year following the date of termination of Mr. Zuckerberg as an Approved Executive Officer for Cause (subject to a 60-day cure period) or the Voluntary Resignation of Mr. Zuckerberg as an Approved Executive Officer, provided that Mr. Zuckerberg's leave of absence or resignation would not constitute a Voluntary Resignation if it were in connection with his serving in a government position or office and if, at the time of such leave or resignation, Mr. Zuckerberg owns (i) 30% or more of the shares of our capital stock that he owned as of the date that we enter into the Founder Agreement with Mr. Zuckerberg (Founder Agreement Effective Date), Mr. Zuckerberg has discussed such leave or resignation with our independent directors or (b) less than 30% of the shares of our capital stock that he owned as of the Founder Agreement Effective Date, such leave or resignation has been approved by a majority of our independent directors or the duration of serving in the government position or office was limited to two years.
The paragraph above is a mess of legalese, but essentially it lays out the conditions for which Zuckerberg (or his family in the case of his death) would lose majority voting control over Facebook. But the entire second half starting with the part in bold introduces a specific caveat. While a "voluntary resignation" as executive officer would normally trigger the share conversion, a leave of absence or resignation that pertains to serving in public office would not.
This opens up the opportunity for Zuckerberg to follow in the footsteps of other billionaires-turned-politicians. The closest comparison could be Michael Bloomberg, the eighth-richest person in the world and founder of financial technology and media company Bloomberg LP. Bloomberg left his company in 2001 to serve as mayor of New York City for 12 years, only to return as CEO in 2014. He is frequently rumored as a possible third-party candidate for president.
Zuckerberg's public office exemption would let him keep control of Facebook while serving in elected office or an appointed position or civil service job. What office that might be is unknown, although it would have to be something big to give it more impact than running Facebook, an software company connecting more than 1.6 billion active users each month. For what it's worth, he couldn't be President until he turned 35, but he's already old enough to serve as Senator or U.S. Representative.
Facebook declined to comment on this clause, and it could be nothing more than a pure hypothetical negotiated by Zuckerberg's lawyers. But the man himself has discussed greater ambitions than just running Facebook, and announced the formation of the Chan Zuckerberg Initiative in December to be a vehicle for large philanthropic goals.
"While helping to connect the world will always be the most important thing I do, there are more global challenges that I feel a responsibility to help solve — like helping to cure all diseases by the end of this century, upgrading our education system so it’s personalized for each student, and protecting our environment from climate change," Zuckerberg wrote in a statement on Wednesday.
For now, that likely means using his new Class C shares for donations and as liquidity to fund philanthropy. But long term, with this agreement, Zuckerberg will always have the option to try public service too.
