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Comment by digitaltrees | Hacker News Reader

Public companies shouldn’t be allowed to have super majority shareholders that rule like a king.

If the stockholders are OK with it, who's to say otherwise?

I do think it would be a good idea to look at additional regulation regarding the public companies that pension and major index funds can invest in. I'm not crazy about being forced to own Musk properties just because I hold an S&P index, for example.

They don’t have voting rights anyway. They are more like fans than stock holders

Yes since Zuck controls the board and negotiators he effectively dealt this outcome to himself, to large degree. Obviously "the shareholders" in a general sense have limited interest protecting the dual class structure.

They can buy and sell the stock. If they weren't okay with it, they could not buy, or sell if they already own.

Shareholders are morons*. That's why the SEC was established in the first place.

*Source: am a moron.

As a moron, are you allowed to decide that Zuck knows how to run Meta better than the shareholders?

We have all kinds of restrictions on corporate governance and shareholders. Extending it to add checks and balances to the role and responsibilities of a CEO is well within established law. We don’t want a tyrant running the government so we added checks and balances (time to add more asap but that’s another issue) and corporations should have similar checks and balances at this point. I don’t think that needs to apply to startups but definitely should apply to public companies.

The SEC is very good at creating complexity, but has been terrible at protecting shareholders. The SEC has failed to detect and prosecute almost every massive fraud, including Madoff and Enron (despite being tipped off in both cases).

That’s counting one side of the ledger: what of fraud that never had the opportunity to happen?

“Some people still died in car crashes, so seatbelts shouldn’t be required in cars”

Why have any regulations for corporate governance?

Because we’ve given them limit liability to shield shareholders from the consequences of their actions to encourage risk taking. Corporate governance exists to prevent abuses. We have also separated ownership, governance and execution (shareholders own, the board governs, executives effectuate the boards directives and corporate governance defines the division of rights responsibilities and interactions).

How do you imagine it working, this regulation whereby an index designed to track the 500 largest companies is required to exclude some of those just because they happen to be run by a guy you dislike?

> … an index designed to track the 500 largest companies is required to exclude some of those just because they happen to be run by a guy you dislike?

Emotions about the executives and founders aside, it may be worthwhile to exclude securities with multiple concentrated voting classes (like Meta) or those with one owner with more than X% of the float (like SpaceX).

Somebody could just create an index fund like that.

I suspect they don’t because such a fund would have missed out on a ton of growth captured by the less “picky” indexes of the last quarter century.

For the longest time, exchanges didn't list stock with super-voting/dual class shares. It was only in the late 80s/early 90s that this rule was dropped; you'll note that Microsoft and Apple don't use them, as they were banned when those companies went public.

who's to say otherwise?

Society? Why are you less crazy about Musk properties than any of the rest of the S&P? Does that suggest that a system that allows such concentrations of wealth and control in so few individuals might be flawed?

IMO, let the unicorns leave. Europe figured it out. Get the vast majority of the benefits of their contributions without being sucked dry and subjected to their whims in whatever other domains they fancy.

The majority stockholders, as in Zuck?

Society, through government, grants shareholders protection from the liability their company may create, that grant of limited liability is a privilege that can and should come with a set of obligations and responsibilities. If they are unable to pick ethical management, or restrain executive behavior then they should lose that privilege.

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