Facebook Inc (NASDAQ:FB)’s board and founder Mark Zuckerberg have been slapped with a lawsuit from a shareholder who questions the company’s compensation policy for its board of directors. Shareholder Ernesto Espinoza filed a lawsuit in Delaware Chancery Court alleging that non-employee directors at Facebook received an average of $461,000 each in Facebook stock during 2013, which is 43% more than the industry average, according to a Bloomberg report.
“Moreover, the members of the board are free to continue to award themselves virtually any amount of compensation they choose into perpetuity,” according to the complaint.
Notes From Schwarzman, Sternlicht, Robert Smith, Mary Callahan Erdoes, Joseph Tsai And Much More From The 2020 Delivering Alpha Conference
The following are rough notes of Stephen Schwarzman, Steve Mnuchin, and Barry Sternlicht's interview from our coverage of the 2020 CNBC Institutional Investor Delivering Alpha Conference. We are posting much more over the next few hours stay tuned. Q2 2020 hedge fund letters, conferences and more One of the most influential investor conferences every year, Read More
Facebook compensations not at par with industry
Bloomberg reported that in the case–Espinoza vs. Zuckerberg, CA9745–shareholder Espinoza accused Facebook Inc (NASDAQ:FB) of breaching fiduciary duties, wasting corporate assets, and unjust enrichment. He asked the court to recover what he believes is unfair excessive compensation and “impose meaningful restrictions on the board’s ability” to grant those awards. Facebook spokeswoman Genevieve Grdina said that the lawsuit is groundless and the company will defend itself vigorously.
One of the defendants in the case is Chief Operating Officer Sheryl Sandberg, a director who received compensation of $16.15 million in 2013, according to regulatory filings. Forbes reported that she is worth $999 million. Zuckerberg received compensation of $653,165 last year, according to regulatory filings, and, according to Forbes, is worth $27.7 billion. Another defendant is Peter Thiel, who received $387,874 in stock last year worth $2.6 billion, according to the Bloomberg Billionaire Index.
Interestingly enough, Espinoza was also a litigant in the 2010 shareholder case against Hewlett-Packard Company (NYSE:HPQ). That case was related to the handling of the resignation of Chief Executive Mark Hurd over his relationship with a former contractor.
Another legal brawl involving Zuckerberg
Back in May, Facebook Inc (NASDAQ:FB) founder Zuckerberg was sued by northern California real estate developer Mircea Voskerician over a deal regarding some land behind Zuckerberg’s home. Voskerician said that he agreed to sell a piece of land to Zuckerberg at a discount, and in return, the Facebook founder promised that he would introduce Voskerician to other rich people who want to buy land. However, Zuckerberg reportedly never introduced him to anyone.
News Daily reported that the developer filed the lawsuit in Santa Clara, accusing Zuckerberg of breaching the contract. Patrick Gunn, Zuckerberg’s attorney, said that his client paid $1.7 million to Voskerician and that his lawsuit is baseless.