- Activist Facebook investors on Thursday are set to vote on whether to fire Mark Zuckerberg as chairman and rip up the firm’s dual-class share structure.
- The idea to oust Zuckerberg was put forward by Trillium Asset Management, and the firm’s senior vice president Jonas Kron is expected to read a message during Facebook’s shareholder meeting.
- With Zuckerberg in the room, according to a prepared statement, he will say it is “unwise to have so much power concentrated in one person” following a string of Facebook scandals.
- You can read his message in full below.
- Visit BusinessInsider.com for more stories.
Mark Zuckerberg is heading for a showdown with investors on Thursday, as the Facebook boss faces a vote on whether he should remain as both CEO and chairman.
At Facebook’s annual shareholder meeting in Silicon Valley,investors are scheduled to vote on two proposals: to hire an independent chairman above Zuckerberg and to rip up the firm’s dual-class share structure.
The idea to oust Zuckerberg as chairman was put forward by the activist shareholder Trillium Asset Management, and the firm’s senior vice president Jonas Kron is expected to read a message in support of his proposal during the meeting.
With Zuckerberg in the room, Kron plans to make the case that Zuckerberg’s enormous power has exacerbated Facebook’s problems over the past two years, such as the Cambridge Analytica privacy scandal as well as election meddling on the social network.
“We have watched with growing dismay as that list of controversial and damaging social impacts grew very long. And as rigorous reporting from The New York Times has shown us, having a unified chair and CEO severely limited the board’s ability to provide the company the oversight it needed,” he plans to tell Zuckerberg and the Facebook board, according to a statement sent to Business Insider.
“It is unwise to have so much power concentrated in one person,” he plans to add, as he bids to drum up support from fellow investors. “Let us not miss this opportunity to make a simple, yet powerful change that would go a long way towards creating a successful future.”
Facebook has always maintained that hiring an independent chairman would not be a good idea. “We do not believe that requiring the Chair to be independent will provide appreciably better direction and performance, and instead could cause inefficiency in board and management function and relations,” it said in a filing last month.
The chance of Trillium’s proposal, which is backed by investors that control about $US3 billion worth of Facebook stock, becoming a reality is extremely slim. A similar proposal in 2017 was popular among independent investors but was crushed because of Zuckerberg’s voting power.
This is because of Facebook’s dual-class share structure. Class B shares have 10 times the voting power of class A shares, and it just so happens that Zuckerberg owns more than 75% of class B stock. It means he has more than half of the voting power at Facebook.
Here’s the full message Jonas Kron plans to read out to Mark Zuckerberg:
Good morning, Mr. Chairman, members of the board, fellow shareholders. My name is Jonas Kron, and I am here on behalf of Trillium Asset Management and the Park Foundation to hereby move Item Number 6, seeking an independent board chair policy for Facebook.
This proposal has been cofiled by the New York City comptroller, the treasurers of Illinois, Rhode Island, Connecticut, and Oregon, and a multitude of smaller and faith-based investors.
At its core this shareholder proposal is about the risk of concentrating too much power in one person – any person.
As proxy advisory firm Glass Lewis put it in its report supporting this shareholder proposal, “vesting a single person with both executive and board leadership concentrates too much responsibility in a single person and inhibits independent board oversight of executives.”
Facebook is incredibly powerful – with wide-ranging and difficult-to-understand, let alone control, social impacts. Over the last two years we have watched with growing dismay as that list of controversial and damaging social impacts grew very long. And as rigorous reporting from The New York Times has shown us, having a unified chair and CEO severely limited the board’s ability to provide the company the oversight it needed.
It is these very facts about power and impact – responsibility and accountability – which highlight why a unified chair and CEO is such a misguided idea – it is unwise to have so much power concentrated in one person.
Which is why we should look to the examples of highly successful companies such as Alphabet, Apple, Autodesk, and Microsoft – to name just a few – which all have independent board chairs.
We recognise that Facebook has a lead independent director. And we acknowledge that the board has recently taken steps to articulate more clearly her powers and responsibilities. However, these recent changes are fundamentally insufficient to meet the task at hand because a lead independent director does not command the same authority as an independent board chair.
This question comes to shareholders at a critical moment. Facebook is embarking on a privacy pivot which leadership has described as requiring a completely new platform. At a time when there is little public trust in Facebook, it is navigating a regulatory landscape that is changing quickly. In this difficult and challenging environment it is important to stop and consider that the CEO position is the most demanding job in corporate America and the responsibilities of a Chairman of the Board are enormously time consuming. We need different people in these two distinctly different leadership positions.
Let us not miss this opportunity to make a simple, yet powerful change that would go a long way towards creating a successful future, not only for Facebook and its employees and its shareholders, but for individuals, families, and communities around the world.
Thank you for your time and attention – and for your support for an independent board chair.
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