At the beginning of this month, Facebook revealed that outside investors had voted overwhelmingly in favour of a series of proposals to fire Mark Zuckerberg, owner and CEO of the social media platform, and make sweeping changes to the share structure of the company.
68% of ordinary shareholders voted to bring in an independent figure to act as the chairman in an attempt to improve the corporate governance of the worlds biggest social media platform.
83% of outside shareholders also voted in favour of getting rid of the companies dual-class share structure, which gives ordinary shareholders (Class A shareholders) one vote per share held, but gives management and directors (Class B shareholders), 10 votes per share held.
Shareholder Votes Meaningless
However, these ordinary investors are neither part of Facebook management, or members of the board, and due to the nature of Facebook’s share structure, where Zuckerberg himself controls 75% of the class B shares (and thus around 60% of the total voting power), ordinary shareholders effectively have no say at all in the running or governance of the company.
No matter how overwhelmingly shareholders vote to change things, Zuckerberg and his management team can defeat any proposal they disagree with simply by voting their more powerful Class B shares.
Looking For Change
Jonas Kron, Director of Shareholder Advocacy for Trillium Asset Management which put forward the proposal for an independent chairperson, said “Investors are clearly concerned, and want change. This level of support is rarely seen in shareholder proposals.”
Shareholders are allegedly furious over the way that Zuckerberg has handled a slew of recent Facebook scandals, including the election interference claims, and the huge data breach last year, which saw the share price of the company fall considerably, and from which it has still not recovered, especially with the anti-trust and FTC investigations ongoing.
Shareholders believe that the company would benefit from an independent chairperson who could hold Zuckerberg and his management team accountable.
For now, things are unlikely to change in the social media giants boardrooms though.