July 27, 2018
Heading into Facebook’s disastrous fiscal second-quarter that saw the social network behemoth’s stock plummet more than 20%, wiping out almost $150 billion in valuation, investment group Trillium Asset Management drafted a proposal seeking to remove founder/CEO Mark Zuckerberg as chairman.
Trillium, which has about $11 million invested in Facebook, seeks an independent chairperson – a move that requires approval by Facebook shareholders and management, which is largely Zuckerberg.
“[Zuckerberg’s] dual-class shareholdings give him approximately 60% of Facebook’s voting shares, leaving the board, even with a lead independent director, with only a limited ability to check Mr. Zuckerberg’s power,” wrote Trillium. “We believe this weakens Facebook’s governance and oversight of management. Selecting an independent chair would free the CEO to focus on managing the company and enable the chairperson to focus on oversight and strategic guidance.”
The investor claims Facebook has resisted recent shareholder requests to separate the chairman/CEO roles. In 2017, according to Trillium, a similar proposal received 51% of shareholder votes cast when excluding the shares of 13 executives and board members.
“However, the board has not acted on this important signal from its non-insider shareholders,” said Trillium. “Google, Microsoft, Apple, Oracle, and Twitter have separate CEO and chairperson roles. More broadly, 59% of the S&P 1500 separated these roles as of April 2018.”
Specifically, Trillium argues Zuckerberg dropped the ball on alleged Russian meddling in the 2016 U.S. elections; sharing personal data of 87 million users with Cambridge Analytica; and sharing user data with consumer electronics device manufacturers, including China’s Huawei, which has been flagged by U.S. intelligence agencies as a national security threat.
The investor said Zuckerberg has done little to curbthe proliferation of fake newson Facebook; propagating violence in Myanmar, India, and South Sudan; and allegedly enabling advertisers to exclude black, Hispanic, and other “ethnic affinities” from seeing ads.
When called to testify before Congress following the Cambridge debacle, Zuckerberg admitted Facebook hadn’t taken a “broad enough view” of its social responsibility.
Indeed, Facebook July 27 revealed it had suspended conspiracy theorist Alex Jones for 30 days after removing four videos by the “Infowars” founder. YouTube suspended Jones for 90 days.
“This broader view is what an independent board chair would provide, which we believe would benefit the company, its shareholders, and its global community of users,” Trillium wrote.