As federal regulators move to investigate platform companies like Facebook over antitrust violations, an Open MIC analysis of Facebook’s latest filing to the SEC, following last week’s annual meeting, shows that independent shareholders overwhelmingly support major governance changes at the company:
68% of independent shareholders voted to separate the role of Board Chair from CEO;
83% of independent shareholders voted to empower shareholders to elect directors through a majority of votes cast, to provide shareholders a meaningful role in director elections;
83% of independent shareholders voted to eliminate the dual-class share structure that currently enables CEO Mark Zuckerberg to control the outcome of any shareholder vote, instead implementing a “one share, one vote” structure;
In addition to demonstrating strong majority support for these three shareholder resolutions, independent shareholders also conveyed their dissatisfaction with company oversight by withholding support from a number of directors, with 27% voting against Facebook Chief Operating Officer Sheryl Sandberg as a member of the board, a full third of independent shareholders (33%) voting against CEO Mark Zuckerberg and Board Chair Susan Desmond-Hellmann, and 38% voting against board member Marc Andreessen.
Despite CEO Mark Zuckerberg’s 58% control of the vote, the independent vote — or the calculation of support from shareholders when excluding insider executives’ disproportionate control of voting shares — is not merely symbolic of shareholders’ grievances. Last year, less than a month after nearly 50% of independent shareholders supported a proposal to establish a board-level Risk Committee, Facebook quietly changed the charter of one of the board’s key committees, renaming the committee to include Risk Oversight, and broadening its mission to include oversight of issues that have placed the social media platform at the center of global controversy, including privacy, data use, community safety and cybersecurity.
Jonas Kron, Senior Vice President, Trillium Asset Management: “This outpouring of support for the independent board chair proposal springs from a deep well of concern about governance at Facebook. Concentrating so much power in on person — any person — is unwise. We look forward to speaking with the board about how it can make the transition to an independent board chair now that so many investors have voted in favor of the proposal.”
Natasha Lamb, Managing Partner and Portfolio Manager, Arjuna Capital: “It’s clear Facebook investors are fed up with the status quo—whether it’s Zuckerberg’s super voting rights, his dominance over the company as Chairman and CEO, the mismanagement of false, hateful, and violent content on the platform, or Facebook’s refusal to meaningfully address its gender and racial pay gaps. But nothing is going to change unless Zuckerberg is willing to loosen his grip. He holds the keys to the castle, but he can’t fix Facebook alone.”
Michael Connor, Executive Director of Open MIC: “The results speak for themselves. Mark Zuckerberg and the Facebook board need to listen to the company’s shareholders. Arrogance is not a substitute for good corporate governance.”