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Facebook Plan For Corporate Governance Under Fire

Some critics are worried Facebook's founder holds too much power.

Critics are questioning whether Facebook founder Mark Zuckerberg holds too much of the power in his company for it to have an effective corporate governance program.

The Institutional Shareholder

Critics are questioning whether Facebook founder Mark Zuckerberg holds too much of the power in his company for it to have an effective corporate governance program.

The Institutional Shareholder Services recently sounded off about the company - which filed for its IPO earlier this month - drawing attention to the fact that Zuckerberg will still hold 57 percent voting control, Chronicle News Services reports.

"The real dilemma of Facebook's dual-class structure will only become evident when (or in a best case scenario, if) an autocratic model of governance makes it less viable than a competitor whose governance gives owners a voice proportionate to the economics they have at risk," the ISS said, as quoted by the news outlet.

As Forbes explains, the issue at hand is incentives or moral hazard, and the company's current setup could lead to the creation of two separate groups of shareholders that have "divergent interests."

The source also notes that ISS gave a nod to Zuckerberg's ability to head up the company and make its success sustainable, but the dual-class structure continues to be a liability. It is one that could later lead to an expensive restructuring that could distract from Facebook's ultimate goals.

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