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Facebook shareholders press for more checks on Mark Zuckerberg’s power

Posted at 6:39 AM, May 30, 2019
and last updated 2019-05-30 06:39:30-04

A growing number of lawmakers and Facebook insiders are raising concerns about whether the company, and its CEO Mark Zuckerberg, have too much power. Now, Facebook shareholders are about to make a similar case to Zuckerberg and other Facebook executives.

Facebook investors are set to vote on eight stockholder proposals presented at the company’s annual shareholder meeting on Thursday, including multiple recommendations to put checks on Zuckerberg’s ironclad grip on the company he founded.

Zuckerberg has the majority of voting power over Facebook, thanks to his ownership of a special class of stock — Class B — that comes with 10 votes per share. Zuckerberg also serves as the chairman of Facebook’s board of directors.

After more than two years of scandals swirling around the company, some shareholders argue Facebook’s corporate governance needs to change.

One proposal calls for Facebook to appoint an independent board chair — the absence of which, shareholders argue, “contributed to Facebook missing, or mishandling, a number of severe controversies.”

Another stockholder proposal calls for Facebook to eliminate its Class B shares, paving the way for shareholders to limit Zuckerberg’s power and “hold management accountable.” As shareholders put it in the proposal, “Fake news, election interference, and threats to our democracy — shareholders need more than deny, deflect, and delay.”

It’s not the first time Zuckerberg has faced investor concerns about his power. For years, shareholders have put forward proposals to eliminate Zuckerberg’s disproportionate voting rights. At the annual shareholder meeting last year, one investor in attendance went so far as to claim Facebook was at risk of becoming a “corporate dictatorship.”

But the latest slate of stockholder proposals comes at a time when Facebook and its tech peers are confronting greater antitrust concerns.

Rep. David Cicilline, the chairman of the House Antitrust Subcommittee, has called for an antitrust investigation into Facebook, with a focus on its acquisitions of Instagram and WhatsApp, both of which now have more than a billion users.

Earlier this month, Facebook cofounder Chris Hughes called for Facebook to be broken up and raised concerns about Zuckerberg’s “unchecked power.” Shortly after, Alex Stamos, Facebook’s former chief security officer, said his old boss should “give up” some of his power and hire a new CEO.

One shareholder proposal notes the growing “calls for the company to be broken up,” and asks that Facebook’s board bring on advisors to “study strategic alternatives.” One of the options the proposal suggests the board consider: selling off “one or more subsidiaries.”

Facebook, for its part, has recommended investors vote against each of these proposals. And it’s precisely the power Zuckerberg is being criticized for having that all but ensures each of these proposals will ultimately fail, as versions of them have in prior years.