In recent years, Facebook has had to deal with a myriad of scandals, from the Cambridge Analytica uproar over not protecting user data to accusations of spreading fake news, or censorship. The way the company handled them, has prompted discontent among shareholders, who attempted to oust its founder from the board’s top spot in 2017 but failed.
Facebook’s activist shareholders are making another bid to change the company’s share structure and force its founder Mark Zuckerberg from the key position on the board of directors, choosing an independent chair.
According to a Securities and Exchange Commission filing, investors made the proposals ahead of an annual shareholder meeting, scheduled for 30 May, and the social network confirmed they would be put to a vote. The document, however, does not mention who these shareholders were.
The rebellious stockholders support changing the company’s policy to ensure that the chair would be an independent member of the board. They stated that Zuckerberg’s position, when the current dual-class stockholding structure gives him 60% of Facebook’s voting shares, leaving the board with only a limited ability to check his power, weakens the company’s governance and oversight of management.
The investors argued that the lack of oversight has contributed to missing and mishandling, controversies like the alleged Russian meddling in US elections, sharing the personal data of 87 million users with Cambridge Analytica, spreading fake news as well as hate messages, promoting violence, and others.
Noting that other tech giants, like Google, Microsoft, Apple, Oracle, and Twitter have separate CEO and chairperson roles, the proposal also points out that Facebook rejected a the similar request earlier and ignored non-insider shareholders’ signals in 2017.
That particular proposal failed due to Facebook’s dual-class shareholdings where Class B stocks have 10 times the voting power of class A stocks, with Zuckerberg owning 75% of the class B shares. So, the proposal was voted down in 2017 even though it received the support of 51% of the votes cast when excluding the shares of 13 executives and board members.
Facebook has rebuffed criticism, saying that the current structure with the lead independent director, who has the responsibility of facilitating discussions and linking the independent directors with the chair, is enough. Its board of directors recommended voting against the proposal, claiming the leadership model whereby Zuckerberg, is both Chairman and CEO, is most effective. The board also rejected a suggestion to change stockholder voting procedure, giving each share an equal vote as well as electing directors by a simple majority vote.