In 2017, a proposal to remove CEO of Facebook, Mark Zuckerberg as the chairman was defeated but this Wednesday, a similar proposal found support among leading Facebook shareholders. Four major U.S. public funds that hold shares in Facebook Inc. supported the move to remove Zuckerberg as chairman. They said that many larger asset managers are expected to back the move. The CEO has been at the center of many high-profile scandals which has dented the image of this hugely popular social media platform.
The proposal to remove Mark Zuckerberg as Chairman was filed by state treasurers from Illinois, Rhode Island and Pennsylvania. New York City Comptroller Scott Stringer co-filed the proposal. The original proposal was filed by activist Trillium Asset Management. However, such outsider resolutions have fallen apart in the past and are seen as merely symbolic as the CEO hold majority control in the company as on date. Zuckerberg has about 60 percent voting rights, according to a company filing in April.
According to Rhode Island State Treasurer Seth Magaziner, the latest proposal was still worth filing as it could be a way of drawing attention to Facebook’s problems and finding solutions to these issues. It could give the proposal movers the chance to force a debate at the annual meeting and garner public opinion in their favor.
The current proposal will be placed in the company’s annual shareholder meeting in May 2019. The board will be asked to create an independent board chair to improve oversight, a practice adopted by most corporate entities. It can ensure fewer problems for the company according to Illinois State Treasurer Michael Frerichs. Magaziner and Frerichs said they planned to seek the support of larger Facebook investors in coming months on this issue.
Vanguard Total Stock Market Index Fund and Fidelity Contrafund are among the major investors who had voted against the 2017 proposal. American Funds Growth Fund of America supported the proposal then but has not made their decision known about the latest move.
In 2017 Facebook had opposed the proposal saying that an independent chair could “cause uncertainty, confusion, and inefficiency in board and management function and relations.”