Facebook shareholders back a proposal to oust Mark Zuckerberg as the board’s chairperson

Last week, Facebook, in a Securities and Exchange Commission filing, announced its annual stockholders' meeting, which will be held on May 30. Going by the proposals listed in the notice looks like the main agenda of this meeting is to make changes to Facebook’s governance structure.

The notice lists eight stockholders proposals that Facebook investors will be casting their votes for. One of these proposals is titled as “a stockholder proposal regarding an independent chair,” indicating that the investors will be deciding on whether Mark Zuckerberg should step down as the chairman and be replaced by an independent hire.

In recent years, we have witnessed an endless number of scandals in which Facebook played a major part, the main one being the Cambridge Analytica data scandal. These scandals have left the investors, who boast of having nearly $3 million shares of the company, in anger and frustration. They believe that Facebook has been unable to properly address these issues because its current corporate governance structure gives Zuckerberg dual power of both CEO and chairman.

Facebook has a dual-class structure, Class A and B. Class B shares have 10 times the voting power of class A shares and not-so-surprisingly Zuckerberg has more than 75% of class B stock. This makes him the holder of more than half of the voting power at Facebook and therefore allows him to dismiss the investor proposals.

Last year in July, Trillium Asset Management, which manages about $11 million (£8.4 million) in Facebook stock, wrote a proposal to oust Mark Zuckerberg as chairman of the social-networking giant.

"A CEO who also serves as a chair can exert excessive influence on the board and its agenda, weakening the board's oversight of management. Separating the chair and CEO positions reduces this conflict, and an independent chair provides the clearest separation of power between the CEO and the rest of the board," reads the proposal by Trillium Asset Management.

Facebook has previously said that splitting Zuckerberg’s role would create "uncertainty, confusion, and inefficiency in board and management function." This time, however, Facebook’s board of directors have called for voting against the stockholders’ proposal. Facebook added, “Our board of directors currently believes that the most effective leadership model is that Mr. Zuckerberg, our founder, and controlling stockholder, serves as both Chairman and CEO.”

Their response further says, “We believe our board of directors is functioning effectively under its current structure, and that the current structure provides appropriate oversight protections. We do not believe that requiring the Chair to be independent will provide appreciably better direction and performance, and instead could cause inefficiency in board and management function and relations.”

Looking at the previous responses by Facebook on such proposals, chances of Zuckerberg stepping down as chair is very similar. “They have zero chance of succeeding. There's no way in hell that Zuckerberg will voluntarily relinquish his position at the top or his control of so much voting power,” adds a Redditor. Another user adds, “Won't matter. Zuckerberg has special shares that give him essentially majority votes by himself”.

Read the full story at Business Insider.