Nearly Half of Independent Facebook Shareholders Buck Company Recommendations, Vote for Change
Last night, Facebook, Inc. released the full results of last week’s shareholder votes, showing that outside investors are overwhelmingly outraged by the dual-class voting system, lack confidence in Facebook’s leadership overall, and seek stronger content management and governance as the company reels from scandal after scandal.
Open MIC’s analysis of the independent vote — that is, the vote without the shares of CEO Mark Zuckerberg and other Facebook insiders — show that almost 50 percent of outside investors supported a proposal to establish a board-level Risk Oversight Committee, and 41 percent voted for a proposal demanding a report on how Facebook is managing content governance, including on issues of election interference, so-called “fake news,” hate speech and harassment online.
Independent shareholders voted overwhelmingly (83 percent) in support of a proposal to change the voting structure so that each share would have one vote, unlike the current dual class voting system that allows Zuckerberg and insiders to control 60 percent of the vote, obscuring widespread dissent and frustration among shareholders. Furthermore, more than a third of outside investors voted against the reelection of Mark Zuckerberg and COO Sheryl Sandberg to the company’s board.
Open MIC, a nonprofit which works with shareholders to improve corporate accountability at tech and media companies, released the following statement from its Executive Director Michael Connor.
“These results are a clear vote of ‘no confidence’ in Facebook’s senior management. Despite strong urging from the company to reject each and every one of these proposals, nearly half of independent shareholders supported two proposals for stronger governance and content management, demonstrating just how out of sync CEO Mark Zuckerberg and his team are with the average investor. Independent shareholders also overwhelmingly voted to change the dual class shareholding vote structure, and nearly one third did not support the re-election of Zuckerberg or COO Sheryl Sandberg to the company’s board.
“It’s been less than a week since the vote at Facebook’s annual meeting — but in this short time we’ve seen more front-page revelations describing how Facebook’s business model relies on breaching user trust and sharing user data with other companies, including manufacturers like Amazon, BlackBerry, Apple and Samsung, and Chinese electronics giant Huawei, which U.S. intelligence officials see as a national security threat. As more and more stories break, it’s becoming obvious that these scandals are not exceptions to the norm; breaching user trust and abandoning values of privacy and human rights is the status quo of Facebook’s business practice. Last week’s vote affirms that investors have had enough and are ready for change.
“Facebook’s investors are sending a clear message: This kind of behavior needs to stop. Regulators and legislators around the globe — as well as more than two billion Facebook users — will be monitoring the company’s performance closely in the months ahead. The stakes are too high for Zuckerberg and the rest of Facebook to continue with apologies and vague promises; investors know it’s time for concrete change now.”
Open MIC supported the development of two of the six shareholder proposals on the ballot this year:
- Proposal 4: Filed by Trillium Asset Management and the Park Foundation, calling for the board to appoint a Risk Oversight Committee, the presence of which may have anticipated and mitigated recent crises; and
- Proposal 6: filed by Arjuna Capital and The New York State Common Retirement Fund, and co-filed by Illinois State Treasurer Michael Frerichs, Baldwin Brothers, Inc. and Harrington Investments seeking a report on how the company is managing content governance (including election interference, fake news, hate speech and online sexual harassment propagated by the platform).You can see a full analysis of the independent vote totals here.