Mark Zuckerberg's forehead is likely to be a bit wetter today than usual. On Wednesday, several major public funds made a statement in which they pledged to remove the Facebook founder from his position as Chief Executive Officer. With countless scandals and a steadily declining stock price, the expense of any other company would be almost certain.
This morning, the state treasurers of Rhode Island, Illinois, and Pennsylvania teamed with the auditor of New York City to sign a proposal issued in June by Trillium Asset Management. Between them, officials control hundreds of billions of dollars of government investment and pension funds. They call on Facebook shareholders to replace Zuckerberg with an independent chairman. In the statement, they underlined the fact that 59 percent of companies in the S & P 1500 separate the roles of CEO and Chairman to ensure independent oversight of corporate governance. They also said that this oversight is necessary because Facebook has "mistreated" a series of serious controversies. The incomplete list of recent scandals she provided includes:
- Russia "interference in US elections" on Facebook
- The "sharing of personal data of 87 million users", which later found its way to Cambridge Analytica
- "Sharing data with equipment manufacturers, including Huawei," identified as a threat to national security by US intelligence (with little public evidence)
- The dissemination of "Fake News" on its platform
- The spread of posts on his platform that fueled violence in Myanmar, India and South Sudan
- "Depression and other mental health problems, including stress and addiction," which may result from the use of Facebook
- "Allow advertisers to exclude black, Hispanic and other" ethnic affinities "from ads"
If the letter had just been released a few hours later, the list could include today's news that Facebook purportedly inflated video metrics on purpose, causing advertisers and compelling media companies to invest massively in video departments, according to newly-submitted Documents a possible class action lawsuit. Facebook has denied any wrongdoing.
In a separate statement, New York's Comptroller Scott Stringer said, "We need Facebook's insular board room to have a serious commitment to real risks – reputation, regulation and the risk to our democracy – that affect the company, its shareholders, and ultimately the hard-earned pension of thousands of workers in New York City. "According to The Wall Street Journal, the NYC Pension Fund held 4.7 million Facebook shares on March 31, currently estimated at around $ 745 million. The other three civil servants monitor $ 32 million worth of Facebook shares.
Apart from a few uptrends, Facebook's share price has been on the decline since July 25, dropping from an all-time high of $ 217 a share to currently $ 158 per share. The company's recent scandals (including a massive data breach) may have something to do with this decline, but it's also a fact that Facebook no longer has enough people to attract new users and drive growth.
We asked Facebook for a comment on this story, but did not receive an immediate response.
Whether or not this proposal receives overwhelming shareholder approval is almost entirely inconsistent. Due to their special structure, Zuckerberg's shares count ten times more votes than other shareholders and currently control around 60 percent of voting rights in the company. It's possible that a show of shareholder dissatisfaction could make him resign, but it seems unlikely. In July, he talked to Recode about all the scandals and said, "I designed the platform, so if anyone gets fired for it, it should be me." Despite the logic of this feeling, he is still there.
[Trillium Asset Management, Reuters]