Several public funds with holdings in Facebook are calling for the removal of CEO Mark Zuckerberg as the chairman of the social network’s board of directors.
The New York City Comptroller Scott Stringer, together with state treasurers from Illinois, Rhode Island and Pennsylvania, and Trillium Asset Management, today announced their support a shareholder initiative to name an independent board chair. They argued, in statement released today, that such a dramatic step is necessary to move the company beyond what they describe as the current “mess” and to “reestablish trust.”
“Facebook plays an outsized role in our society and our economy. They have a social and financial responsibility to be transparent – that’s why we’re demanding independence and accountability in the company’s boardroom,” Stringer in a statement. “We need Facebook’s insular boardroom to make a serious commitment to addressing real risks – reputational, regulatory, and the risk to our democracy.”
The Wall Street Journal, which was the first to report the shareholder initiative to oust Zuckerberg from the chairman’s seat, notes that the effort will have little practical effect. Zuckerberg controls the bulk of the company’s super-voting shares, which give him control over 60% of Facebook’s voting shares.
The shareholder initiative (read it here) acknowledges that an independent director would have a limited ability to check Zuckerberg’s power, but adds that separating the CEO and Chairman’s roles would give the executive more time to focus on managing the company.
This push for greater independent oversight of Facebook’s management comes at a time of heightened criticism of the company’s handling of a number of controversies, including Russia’s meddling during the 2016 presidential election, the Cambridge Analytica privacy scandal, the platform’s role in fanning violence against the minority Muslim population in Myanmar, and the recently disclosed data breach that affected 30 million users.
“An independent board chair is essential to moving Facebook forward from this mess, and to reestablish trust with Americans and investors alike,” Stringer said in the statement.
Facebook resisted a recent shareholder request that the company separate the roles of chairman and CEO. Last year, a similar proposal gained support of 51% of the votes cast, excluding the shares of Facebook’s top executives and board members. The board did not act on this measure.
At the time, Facebook said such a move was unnecessary. The company’s lead independent director, Susan Desmond-Hellman, who is the chief executive officer of The Gates Foundation, serves as a liaison between Zuckerberg and the independent directors, and represents the interests of all shareholders.
“Forcing a division between our Chairman and our CEO could harm our performance and be detrimental to interests of our stockholders,” the company said in its written response to the 2017 proposal.
Facebook declined comment on the new shareholder initiative.