Mark Zuckerberg Signed the Wrong Document

A problem at the very top of corporate management is, if you don't have a boss, who decides how much you get paid? I mean, it's not a problem for you. You decide how much you get paid. Be generous! But it's a problem for that boss you don't have. Corporate directors work for the shareholders, but the shareholders are mostly not around to supervise them. So directors tend to decide for themselves how much they get paid, which leads some shareholders to worry that they get paid too much.

Here's what happened at Facebook. Facebook had eight directors on its board. Six of them were not Facebook employees.1446150271387 Two of them were: chief operating officer Sheryl Sandberg and Mark Zuckerberg. Zuckerberg is of course Facebook's co-founder, chief executive officer and board chairman. He is also its majority shareholder, sort of: Facebook has two classes of stock, with Class B shares getting 10 votes per share, and Zuckerberg owns most of Class B, so he controls about 60 percent of the vote despite only owning about 15 percent of the stock.1446137257825 In 2013, the board met to decide how much to pay itself, or, rather, how much to pay the six non-employee directors. (Sandberg and Zuckerberg, as employees, had separate arrangements.1446137408435) The directors decided to pay themselves about $300,000 a year, in the form of restricted stock units, plus various committee fees and other amounts. Later, a formal plan was circulated, and all of the directors approved it by written consent.