Mark Zuckerberg’s forehead is likely a little more moist than usual this afternoon. On Wednesday, several major public funds issued a statement backing a push to remove the Facebook founder from his position as chairman of the board. Amid countless scandals and a steadily dropping stock price, the effort would be all but certain to succeed at any other company.
This morning, the state treasurers of Rhode Island, Illinois, and Pennsylvania joined forces with the comptroller of New York City to sign on to a proposal first issued by Trillium Asset Management in June. Between them, the officials control hundreds of billions of dollars in state investments and pension funds. They are requesting that Facebook’s shareholders consider replacing Zuckerberg with an independent chairman.
In the statement, they highlighted the fact that 59 per cent of companies on the S&P 1500 separate the roles of the CEO and chairman in order to provide true independent oversight of corporate governance. They also said that this oversight is needed because Facebook has mishandled “a number of severe controversies.” The incomplete list of recent scandals they provided includes:
Russia “meddling in U.S. elections” on Facebook
The “sharing personal data of 87 million users” that later found its way to Cambridge Analytica
“Data-sharing with device manufacturers, including Huawei,” which U.S. intelligence has identified (with little public evidence) as a threat to national security
The proliferation of “fake news” on its platform
The propagation of posts on its platform that fuelled violence in Myanmar, India, and South Sudan
“Depression and other mental health issues, including stress and addiction,” that may result from using Facebook
“Allowing advertisers to exclude black, Hispanic, and other ‘ethnic affinities’ from seeing ads”
If the letter had been released just a few hours later, the list could’ve included today’s news that Facebook allegedly inflated video metrics intentionally, thus deceiving advertisers and convincing media companies to invest heavily in video departments, according to documents newly filed as part of a potential class-action lawsuit. Facebook has denied any wrongdoing.
In a separate statement, New York City Comptroller Scott Stringer said, “We need Facebook’s insular boardroom to make a serious commitment to addressing real risks – reputational, regulatory, and the risk to our democracy – that impact the company, its shareowners, and ultimately the hard-earned pensions of thousands of New York City workers.” According to the Wall Street Journal, NYC’s pension fund held 4.7 million Facebook shares as of March 31, which would currently be valued at around $US745 ($1,048) million. The other three state officials oversee about $US32 ($45) million worth of Facebook stock.
Aside from a few upticks, Facebook’s stock price has been in decline since July 25, falling from an all-time high of $US217 ($305) per share to the current $US158 ($222) per share. While the company’s most recent scandals (including a massive data breach) might have something to do with that decline, it’s also just a fact that Facebook is running out of people to bring in as new users and fuel growth.
We reached out to Facebook for comment on this story but did not receive an immediate reply.
Whether or not this proposal receives overwhelming shareholder support is almost completely inconsequential. Because of a special structure, Zuckerberg’s shares count his vote 10 times more than other shareholders, and he currently controls about 60 per cent of the voting power at the company. It’s possible that a show of shareholder discontent could get him to step down, but it seems unlikely. In July, he spoke to Recode about all of the scandals and said, “I designed the platform, so if someone’s going to get fired for this, it should be me.” Despite the logic of that sentiment, he’s still there.