Mark Zuckerberg Bought Instagram Without Consulting Board: Report
Facebook CEO Mark Zuckerberg acquired Instagram pretty much on his own, without consulting Facebook's board or its in-house lawyers, The Wall Street Journal reports.
Zuckerberg and Instagram's CEO Kevin Systrom hammered out the $1 billion deal -- the biggest in Facebook's history -- over three days of discussions at Zuckerberg's home in Palo Alto, Calif., according to the Journal. The board "was told, not consulted" by Zuck about the deal just hours before it was set in stone.
Zuckerberg controls 57% of Facebook's voting rights, so he can pursue deals on his own if he chooses, the Journal reports. But when Facebook goes public, he may want to think twice.
"You want the board to provide caution to the CEO," the director of Drexel University's Center for Corporate Governance told the Journal. "They are the last line of defense for minority shareholders."
But it's not as if Mark Zuckerberg went completely rogue to land the Instagram deal. The Journal reports Zuckerberg did consult with Facebook's director of corporate development, Amin Zoufonoun -- a former engineer who is also a lawyer, according to his LinkedIn profile.
Zoufonoun knows a thing or two about corporate negotiations and acquisitions: He handled such tasks as Google's director of corporate development before joining Facebook last year.
Also, Facebook's board did sign-off on the Instagram deal, though the board's vote was largely symbolic, sources told the Journal.
Furthermore, Zuckerberg likely had strategic reasons for not bringing in lawyers to help with the Instagram negotiations.
Mark Zuckerberg and Instagram's Kevin Systrom, both twentysomething Silicon Valley CEOs, were apparently more comfortable talking on their own, without attorneys in the way. The presence of "suits" may have caused Systrom to "react negatively," the Journal reports.
- Zuckerberg closed Instagram deal without Facebook board approval (Ars Technica)
- FindLaw Legal Pulse: News, photos, topics, and quotes on Mark Zuckerberg (FindLaw)
- Corporate Counsel Center - Mergers & Acquisitions (FindLaw)
- Instagram Bought by Facebook for $1 Billion (FindLaw's In House)