A group of Facebook shareholders wants Mark Zuckerberg to be replaced by an independent director on the board. They have entered a proposal suggesting that the chairperson should be capable of overseeing the company’s executives, improving corporate governance and setting a more accountable, pro-shareholder agenda.
How an independent director could help Facebook
Members of consumer watchdog group SumOfUs forwarded this proposal. The organization claims to be an online community that works towards determining the responsibility of the corporations on a variety of global issues such as climate change, human rights, corruption, corporate power, right of the workers and so on.
Losa Lindsley, the capital markets advisor for SumOfUs, told VentureBeat that 333,000 have signed the petition asking Facebook to improve its corporate citizenship.
Lindsley said, “The shares held by four individual SumOfUs members enabled us to file this proposal.”
According to the proposal, shareholders’ value will increase with an independent chair who will work as a balance of power between the CEO and the board. Further, the proposal reads that the independent director will be “particularly constructive” at a time when the company is undergoing a lot of criticism regarding its perceived role in the promotion of misleading news, censorship, hate speech, making deals with law enforcement and other government agencies, ad view targeting based on race and so on.
The proposal cites the new capital structure approved by Facebook last year, which it says exhibits the imbalance of power. In June, participants during Facebook’s shareholder meeting were asked to vote on a proposal to issue Class C shares in order to keep Zuckerberg in control. Though the proposal was passed, the social networking company is dealing with litigation filed by at least one shareholder who said the deal is unfair.
Proposal is set for defeat
The proposal, however, is not expected to cause any sort of turbulence at the company as Zuckerberg is Facebook’s largest shareholder, so the proposal is set for defeat. But activist shareholders want to grab the company’s attention.
Lindsley told VentureBeat that this shareholder resolution, like any other resolution, is advisory in nature. Even if 99% vote in favor of it, the board will not be under legal obligation to implement it, she said.
“However, most competent board members realize that it is unwise to ignore the voice of the shareholders whose interests they are charged with representing.”
The company chose not to comment on the proposal but will probably issue a statement when it files a proxy in April, a usual practice followed by the company.