Facebook is allegedly being pressured by a group of shareholders to remove CEO Mark Zuckerberg from the board of directors, according to a proposal obtained by VentureBeat.
The shareowners want Zuckerberg, who has been on the board since 2012, to be replaced by an independent chairperson.
“We believe the combination of these two roles in a single person weakens a corporation’s governance, which can harm shareholder value,” the proposal stated.
The proposal was brought up by the consumer watchdog group SumOfUs. The organization works to curb the growing power of corporations, whether it relates to pollution or tax evasion, the group states on its site.
The removing Zuckerberg as Facebook CEO proposal claims an independent chairperson would do a better to “oversee the executives of the company, improve corporate governance, and set a more accountable, pro-shareholder agenda,” according to VentureBeat.
The revealed proposal comes after a lawsuit brought by Facebook shareholders against the board, which were accused of not representing investors’ interests when agreeing to Zuckerberg’s proposed stock plan. Zuckerberg, who holds a majority share of voting Facebook stock, wanted to be able to sell his shares to fund his philanthropic efforts, the Chan Zuckerberg Initiative, without losing control of the company. He then proposed the creation of a new class of shares for himself that would still let him stay in control of the company. The committee ended up agreeing to Zuckerberg’s plan. It was in that lawsuit that Zuckerberg’s political aspirations were revealed in December 2016.
The recent proposal cites the lawsuit involving the new structure approved by Facebook last year as an imbalance of power.
The proposal states:
“In our view, shareholder value is enhanced by an independent board chair who can provide a balance of power between the CEO and the board and support strong board leadership. Independent board leadership is sorely needed at Facebook following the board’s decision in 2016 to approve a new capital structure which reduced the rights of Class A shareholders without requiring a majority vote of those shareholders.”
Having someone serve as both CEO and chairperson is not abnormal for companies. Tesla, IBM, Amazon, Netflix and other companies have one person for both positions. Also, it will be hard to get Zuckerberg off the board of directors, since he in one of the biggest shareholders and could strike down the proposal easily with other investors.
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