In short: A new shareholder proposal put forward by no fewer than four US Public Fund officials and Facebook shareholders seeks to force oversight into place for company CEO and Chairman Mark Zuckerberg. Initially put forward by Trillium Asset Management and now backed by State Treasurers Seth Magaziner, Michael Frerichs, and Joe Torsella as well as New York City Comptroller Scott Stringer, the proposal will be brought forward among others at the company’s upcoming shareholders meeting in May. More specifically, the shareholders assert that Mr. Zuckerbergs two positions need to be separated and the Chairman position filled by somebody else. The proposal centers primarily around the company’s wide array of ‘controversies’ an emphasis is also placed on the fact that, 59-percent of the companies included in the S&P 1500 index separate the roles. Moreover, the shareholders point out, Mr. Zuckerberg’s position affords him an insurmountable 60-percent of voting shares, leaving no room for real ‘checks’ on his power within the company.
Background: The list of controversies in the proposal starts with ‘Russian meddling in U.S. elections’ and moves through several similarly serious allegations. For example, the proposal asserts that Facebook has played a big role in the propagation of both fake news and outbreaks of violence in Myanmar, India, and South Sudan. That’s in addition to its role in the exclusion of minority groups and “ethnic affinities” from advertising campaigns and its role in propagating depression, stress, addiction, and other issues associated with mental health. Beyond those, the proposal references the impact of data security breaches for 87 million users following the Cambridge Analytica scandal and data sharing with device manufacturers such as Huawei in spite of that company being a national security threat by US intelligence agencies. That’s leaving aside the more recent breaches, including one that was initially thought to have compromised sensitive user data for as many as 30 million Facebook users.
Impact: Bearing that in mind, this latest proposal won’t necessarily result in any major changes at Facebook either. However, it also pulls together and summarizes a good number of the missteps taken and mistakes made by the social media giant over the past several months. Because Mr. Zuckerberg has already been under fire for privacy concerns and its handling of each of the controversies brought up in the proposal. With enough votes in favor of the move to remove the executive from one of his positions and amid increasing public scrutiny, could still serve as a catalyst, if it’s taken seriously by Mr. Zuckerberg.