Even billionaires have to pay attention to the fine print.
That’s what Delaware Chancery Court Judge Andre Bouchard ruled Tuesday when he said that Facebook (FB) CEO and controlling shareholder Mark Zuckerberg failed to use the proper documentation to approve the pay of Facebook’s board members, according to to a report in Bloomberg. The mistake was revealed in a lawsuit in which a Facebook shareholder accused Zuckerberg of overpaying his board, which makes on average $461,000 annually, or 46% more than their industry peers.
Since Zuckerberg controls more than half of the voting shares in Facebook, how much he pays the board shouldn’t be open to dispute. But, as Bloomberg’s Matt Levine points out, the story doesn’t end there:
Of course [Zuckerberg] signed off on the pay package: He was at the board meeting that discussed it, and he signed a written consent approving it. So you might think that would be enough? But no! He signed off on the pay package as a director. He didn’t sign off on it as a shareholder. He signed, but on, like, the wrong letterhead.
In other words, because Zuckerberg used the wrong paperwork, his board members are at risk of giving up hundreds of thousands in compensation. As Judge Bouchard said: “Although he can outvote all other stockholders and thus has the power to effect any stockholder action he chooses, he must still adhere to the corporate formalities.”