Several major US Public fund that hold shares in Facebook Inc have submitted a proposal for removing CEO Mark Zuckerberg from the position of chairman of the company’s board.
Most people are commenting that proposal is just symbolic and the surprising reason for that is Mark Zuckerburg personally controls around 60% of voting rights in facebook shares. This arrangement of company’s board structure has made to compare with “dictatorship.”
The proposal is still considered noteworthy, because of the investors involved. This proposal will be voted on at Facebook’s shareholder meeting in 2019.
The pension funds of New York City are joining activist shareholder Trillium Asset Management, as well as the state treasurers of Rhode Island, Illinois, and Pennsylvania for this proposal of separating position of chair and CEO.
The New York City Pension Funds owns about 4.5 million Facebook shares till July 31, while Trillium held 53,000 shares.The Pennsylvania Treasury hold 38,737 shares. And the Illinois Treasury owned 190,712 shares as of August. Rhode Island funds hold 168,230 Facebook shares, a Spokesperson said.
NYC Comptroller Scott Stringer discusses with CNBC about why he is pushing the proposal for Facebook CEO Mark Zuckerberg to step down from his post
“Facebook plays an outsized role in our country and economy. They have a social and financial responsibility to be transparent—that’s why we’re demanding independence and accountability in the company’s directory board. We need Facebook’s insular boardroom to make a serious commitment to address real risks like —reputational, regulatory, and the risk to our democracy—that impact the country, its shareholders, and ultimately the hard-earned pensions of thousands of New York City workers,” Stringer pinned.
He also added “An independent board chair is essential to moving Facebook forward from this mess, and to reestablish the trust with Americans and investors too”
Rhode Island State Treasurer Seth Magaziner said “This proposal will allow us to force a conversation at the annual meeting, and from now until then in the court of public opinion”.
This proposal cites the issues that have hurt the reputation of the world’s largest social media network, including the unauthorized sharing of user information, the problem of fake news, and foreign meddling in U.S. elections.
Another proposal to replace Zuckerberg as chairman was filed in April this year before the controversy of Cambridge Analytica’s misuse of Facebook user data.
But that was declined stating the reason that an independent chair could “cause uncertainty, confusion, and inefficiency in board and management function and relations.”
Shares of Facebook also had a difficult year, under pressure from controversy about the privacy and operational issues as well as concerns of slowing revenue growth. They closed Wednesday at $159.42, 10% lower than at the start of the year. And well off a closing high of $217.50 reached on July 25.