Facebook CEO Mark Zuckerberg has too much power and it’s hurting the company, according to multiple shareholder proposals that will be considered at the company’s annual meeting, including one that calls for exploring strategic alternatives such as selling the tech giant’s other businesses.
Another proposal urges the company to appoint an independent board chair. Zuckerberg is both chief executive and chairman.
"We believe this lack of independent board Chair and oversight has contributed to Facebook missing, or mishandling, a number of severe controversies, increasing risk exposure and costs to shareholders," said Trillium Asset Management, which submitted the proposal along with some state treasurers and the New York City comptroller.
Among the examples they list: Russian meddling in US elections, the sharing of users’ personal data with Cambridge Analytica, proliferation of fake news, violence in Myanmar and other parts of the world, ad-targeting practices that allowed for excluding minorities, and more.
A similar proposal about an independent chair was submitted in 2017 and rejected by shareholders, the company said it in its proxy, released April 12. But Trillium and the others pointed out that "when excluding the shares of 13 executives and board members", 51% of shareholders voted for the proposal that year.
Four out of eight shareholder proposals this year are critical of the company’s dual-class stock structure, which gives a select group of insiders more power, especially Zuckerberg, who has 57.7% of voting rights.
"Facebook operates essentially as a dictatorship," notes one shareholder proposal, which calls for requiring a majority vote for board directors. "Fake news, election interference, threats to our bottom line and our democracy. Shareholders need more than deny, deflect, and delay."
Facebook’s response in its proxy to this and another proposal that the company give each of its shares an equal vote: Its "current corporate governance structure is sound and effective".
The company is recommending a no vote on all shareholder proposals, which also include a call for a content governance report that shows how Facebook deals with content-related decisions as "abuse and misinformation campaigns continue", plus a request for a report on the company’s global median gender pay gap.
The other two proposals are related to conservatives’ complaints that tech companies are too liberal. One proposal asks that the company consider board directors’ ideological perspectives. The proxy didn’t identify who submitted the proposal, but the National Centre for Public Policy Research confirmed April 15 that the proposal was submitted by its Free Enterprise Project, which recently called on Apple to do the same thing. Another proposal asks Facebook to report whether it supports and tries to hire employees who "do not share all or part of Silicon Valley’s dominant political ideology".
The proposals echo some concerns by lawmakers, activists and others about the controversies surrounding Facebook in the past couple of years. Last year, advocacy groups urged the US Federal Trade Commission to separate Facebook from Messenger, Instagram and WhatsApp, and presidential candidate Sen. Elizabeth Warren, D-Massachusetts, this year called for breaking up Facebook and other tech giants. As for accusations of liberal bias, executives from Facebook, Google and Twitter were grilled by Republicans on the Senate Judiciary Committee last week about the issue.
In addition, three of the proposals cite declines in Facebook’s stock price as reasons for making big changes. The company’s shares fell about 28% in 2018. However, they are up nearly 33% so far this year.
Facebook’s annual meeting will be May 30.
In other news about Facebook’s board, the company said in its proxy that it will not be re-nominating Netflix CEO Reed Hastings and former White House chief of staff Erskine Bowles, who served under President Bill Clinton. Hastings and Bowles have served on the Menlo Park company’s board since 2011. The tech giant is nominating PayPal executive Peggy Alford as a director. She would be the second African American on the board, and the third woman – which would comply with California’s new law, which requires companies with six or more directors to have at least three women on its board by 2021.
Netflix had no comment Monday regarding Hastings’ departure from the board. But there have been reports that because Facebook has been boosting its focus on video, which could compete with Netflix’s offerings, Hastings had been considering leaving. – The San Jose Mercury News/Tribune News Service