Five Facebook shareholders are fighting back against Mark Zuckerberg’s control of the company he founded after several scandals have plummeted share price.
Citing privacy outrages, political influence, the proliferation of fake news and data leaks, the asset managers are hoping to raise support to remove Zuckerberg as Chairman. The reputation and credibility of Facebook as a business which can effectively operate in the digital economy has certainly been called into question, though considering Zuckerberg himself control 60% of the Facebook voting rights, it might prove to be a difficult battle.
New York City Pension Funds, Illinois state treasurer Michael Frerichs, Rhode Island state treasurer Seth Magaziner, Pennsylvania treasurer Joe Torsella, and Trillium Asset Management are the troublesome shareholders, though the filing should be viewed as nothing more than symbolic. With Zuckerberg’s control over Facebook coming close to a dictatorship, it is unlikely anything will change. That will not prevent investors from complaining however.
At the time of writing, the Facebook share price was standing at $159, having started the year at $181 and reaching a peak of $271 in July. This is the lowest since July 2017, a period which has seen Facebook get grilled by politicians over fake news and political influence, Cambridge Analytica dragging the company down and data breaches leaking personal information to nefarious actors. While Facebook will always be a target for hackers and the bottom-dwellers of the internet, the shareholders are calling into question Zuckerberg’s ability to manage the business.
“Facebook plays an outsized role in our society and our economy,” said New York City Comptroller Scott Stringer. “They have a social and financial responsibility to be transparent – that’s why we’re demanding independence and accountability in the company’s boardroom.
“We need Facebook’s insular boardroom to make a serious commitment to addressing real risks – reputational, regulatory, and the risk to our democracy – that impact the company, its shareowners, and ultimately the hard-earned pensions of thousands of New York City workers. An independent board chair is essential to moving Facebook forward from this mess, and to re-establish trust with Americans and investors alike.”
This is not the first time Zuckerberg has faced a challenge to his reign. Three of the aforementioned funds also supported a proposal in 2017 to create an independent board, though many of the largest shareholders voted against the proposal. This new filing, which also suggests the creation of an independent board chair to improve oversight, is set to feature at the 2019 AGM, with the troublesome shareholders stating they will be drumming up support over the coming months.
What is worth noting is this is not a revolutionary idea. Most other companies, especially multinationals, appoint an independent board to oversee operations and maintain transparency for shareholders. It is common business practice. Perhaps the steamroller success of Facebook and the continuous supply of profits have convinced shareholders this is not necessary at Facebook, but the declining share price is certainly something to worry about. Facebook is under pressure from numerous different governments, consumer groups and regulators, and Zuckerberg doesn’t seem to want to do much about it.
The UK is an excellent example of inaction from Zuckerberg. After ignoring numerous calls to appear in-front of a Parliamentary committee, the UK Government has threatened Zuckerberg with a summons should he ever set foot in the country again. It is difficult to imagine any other multi-national business taking this approach to criticism and condemnation.
While the filing might be nothing more than a PR statement, it is clear the shareholders are not happy with the way Zuckerberg is running the business. Unfortunately, it might appear the socially-incompetent Zuckerberg is under little pressure to do anything about it considering his voting power. Ironically, the social media giant seems the closest thing to a dictatorship the US has to offer the world.