As most of you know, Facebook acquired Instagram last week for about… (cue Dr. Evil) one BILLION dollars. But an article in the Wall Street Journal illustrates how the board’s input on CEO Mark Zuckerberg’s decision was virtually nil. Notwithstanding the fact that he holds majority voting rights and can technically do what he wants, it’s still a pretty bad-a** move, in this blogger’s opinion. WSJ reports:
On the morning of Sunday, April 8, Facebook Inc.’s youthful chief executive, Mark Zuckerberg, alerted his board of directors that he intended to buy Instagram, the hot photo-sharing service.
It was the first the board heard of what, later that day, would become Facebook’s largest acquisition ever, according to several people familiar with the matter. Mr. Zuckerberg and his counterpart at Instagram, Kevin Systrom, had already been talking over the deal for three days, these people said.
Negotiating mostly on his own, Mr. Zuckerberg had fielded Mr. Systrom’s opening number, $2 billion, and whittled it down over several meetings at Mr. Zuckerberg’s $7 million five-bedroom home in Palo Alto. Later that Sunday, the two 20-somethings would agree on a sale valued at $1 billion.
It was a remarkably speedy three-day path to a deal for Facebook—a young company taking pains to portray itself as blue-chip ahead of its initial public offering of stock in a few weeks that could value it at up to $100 billion. Companies generally prefer to bring in ranks of lawyers and bankers to scrutinize a deal before proceeding, a process that can eat up days or weeks.
Mr. Zuckerberg ditched all that. By the time Facebook’s board was brought in, the deal was all but done. The board, according to one person familiar with the matter, "Was told, not consulted."
Mr. Zuckerberg owns 28% of Facebook’s stock, and controls 57% of its voting rights, giving him the freedom to act independently if he wants. Mr. Systrom, similarly, owns about 45% of his company. That control means investors must accept the fact that the CEOs can move quickly.