Things could have looked very different at Facebook (NASDAQ:FB) headquarters late last week. You’d probably never know it from FB stock, which remains relatively elevated. But May 30 was the company’s annual stockholder meeting — and many of those stockholders were pushing for big change.
They were tired of two years of scandal during which CEO Mark Zuckerberg seemed unable to effectively deal with the mess. They were drained with the headlines. And they were worried about the prospect of increased government oversight and what that might mean for their investment in Facebook stock.
Despite multiple attempts to lessen his power or even oust Zuckerberg from his leadership role, today he remains the CEO and chairman of Facebook.
Angry FB Stock Investors Push for Change at Annual Meeting
Facebook’s annual stockholder meeting was held a few nights ago, and this was anything but a routine event. Going into the meeting, FB stock had a market capitalization of $522.4 billion, with shares sitting at a penny over $183.
A year ago, the Facebook stock price was slightly higher at just under $192. However, in the height of the troubles — such as data-privacy scandals and Russian electoral meddling — the social-media firm’s equity dropped as low as $124.
Adding to the controversies is the reality that user growth is slowing. Worse yet, the company is struggling to keep those users they already have engaged. If adults join teens in abandoning Facebook for other social media platforms like Snap Inc’s (NYSE:SNAP) Snapchat, the situation could quickly turn dire for investors.
Despite the recovery in the first six months of this year, there is a concern among many shareholders that Zuckerberg’s leadership is simply not up to the challenges the company faces. If fundamental issues are not resolved, government regulations could throttle the company’s ad revenue — or worse.
If that wasn’t bad enough, Facebook’s high-level executives are voicing their opposition. Tellingly, co-founder Chris Hughes wrote an op-ed in The New York Times calling for the company to be broken up. In the piece, Hughes described Zuckerberg’s power as “unprecedented and un-American.”
At the stockholder’s meeting, stakeholders presented multiple proposals that would have put limits on Zuckerberg’s power. In an interview with Recode, a senior manager for Trillium Asset Management (one of the FB stock investors trying to force change) laid out their argument:
They’re having a governance failure now. And if they can get the governance architecture right, that will make a big difference in terms of putting the company on a long-term trajectory for success.
Mark Zuckerberg Survives Leadership Challenge(s)
Amid the proposals, one stood out starkly: it was a request that Zuckerberg step down as chairman. At one point a significant owner of FB stock asked a board member if they would be willing to oust him as CEO.
However, despite the challenges, the growing frustration and the risks the Facebook stock price faces, Zuckerberg remained firmly in control. In fact, his leadership role was never in any real jeopardy because the way the company is structured. Essentially, he is untouchable.
Facebook has a dual-class share structure, with class B shares getting 10 votes to every one vote for a class A share. If you buy FB stock, you’re buying a class A share. On the other hand, Zuckerberg owns class B shares. As a result, the embattled but firmly cemented CEO is estimated to personally control nearly 60% of shareholder votes.
And Mark Zuckerberg did not vote to limit his own power.
Facebook stock dipped to $181 in after-hours trading following the meeting. Unsurprisingly, shares took another tumble last Friday. The markets seem unimpressed that the social-media giant will go with more of the same.
Still, with his position as “captain” cemented once again, the big question remains whether Mark Zuckerberg can right the ship. The future of FB stock depends on it.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.
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