A specter is haunting Facebook’s shareholder meeting – the specter of a giant, inflatable angry emoji. The eight-foot frowny face that protesters took to Facebook’s annual meeting Thursday in Palo Alto, California, was just one of numerous manifestations of investor and activist anger at the social media company.
Investors voted on eight independent shareholder proposals, all aimed at reforming a company that has seen its reputation shredded in recent years over concerns including data misuse, anti-competitive behavior, incitement of genocidal violence, and the hijacking of democratic elections.
Among the proposals with the most momentum were a plan to eliminate Facebook’s dual-class share structure and another to require an independent board chair. Both were doomed to fail due to the very issue they aimed to address: Mark Zuckerberg, who is both chair and chief executive, controls more than 50% of the voting shares for the company, despite owning only about 15% of the company in total.
All eight were duly defeated, but only after their proponents had a chance to address Zuckerberg and other assembled board members. Natasha Lamb, managing director of Arjuna Capital, described the company as “Zuckerberg’s failing autocracy” while advocating for a report on how Facebook’s “mismanagement” is affecting human rights and democracy around the world.
“It is unwise to have so much power concentrated in one person,” said Jonas Kron of Trillium Asset Management, whose proposal for an independent board chair was endorsed by seven state treasurers.
“Facebook has long ago left its infancy stage where it is common to have the CEO also be the chairman of the board,” said Deborah Goldberg, state treasurer of Massachusetts.
Goldberg attributed many of the company’s problems to “insular management that is not challenged by those with varying points of view and experiences”.
Outside of Facebook’s annual shareholders meeting in Menlo Park. Protesters from SumofUs and Bend The Arc are holding up signs that read “Break Up Facebook” and “Vote No on Zuckerberg.” pic.twitter.com/guvqIjRm1H— Queenie Wong (@QWongSJ) May 30, 2019
Zuckerberg expounded on the importance of limiting any company’s power through “independent oversight” and a “robust democratic process”, except in the one area shareholders were seeking it – Facebook’s corporate governance.
Asked whether he would be willing to cede power by stepping down as board chair, Zuckerberg filibustered by discussing government regulation and the “independent” review body he plans to establish for content moderation disputes. He expressed discomfort with his company having “unilateral authority to make decisions over speech and elections and society” but refused to acknowledge that the question was directed at his own unilateral authority over the company.
It was left to Susan Desmond-Hellmann, CEO of the Bill & Melinda Gates Foundation and lead independent director on the board, to answer the question of whether she would commit to convene an executive session without Zuckerberg present to elect a new chair.
“No,” she responded. “The company and I and the board of directors are comfortable with the current arrangement.”
Activist groups including Color of Change and Majority Action also urgedshareholders to vote against Zuckerberg’s re-election to the board.
“To date, Facebook has produced no comprehensive accounting to shareholders of the causes of its failures of governance and oversight, let alone a comprehensive plan to rectify them,” said Eli Kasargod-Staub, executive director of Majority Action. “The most important action shareholders can now take is to withhold support from Zuckerberg’s re-election to the board.”
Despite the fact that they could not win, dissident investors and activist groups hoped that a strong showing from independent shareholders could pressure the board to act anyway.
The symbolic actions got started overnight, when another activist group, Fight for the Future, projected the message “Fire Zuck” on to the Palo Alto hotel where the meeting will take place.
Other shareholder proposals included changes to how directors are elected and requirements for increased transparency on the gender pay gap. Two conservative organizations put forward proposals designed to increase the “ideological” diversity of Facebook’s board and staff.
The Facebook board of directors opposed all eight independent proposals.