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Thursday, December 1, 2022

Facebook shareholders fail in bid to limit Mark Zuckerberg’s power

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Mark Zuckerberg will remain as chairman of Facebook after an attempt to strip him of the position put forward by a group of shareholders was rejected.

Investors in the social network are growing increasingly agitated with Mr Zuckerberg holding both chairman and chief executive roles amid “a seemingly endless stream of controversies and data breaches”, one shareholder said during an annual general meeting.

However, Mr Zuckerberg was unlikely to be rattled by questions over his leadership, given that he holds the majority of the voting power.

Investment firms such as Trillium and NorthStar have long called for the 35-year-old to stand down from his chairman post and focus on being chief executive, urging him to take the example of other tech firms such as Google owner Alphabet, Apple and Microsoft, which have independent board chairs.

Outside the meeting, protesters convened to voice their concerns about Mr Zuckerberg’s power, while the Fight for the Future advocacy group projected a ‘Fire Mark Zuckerberg’ display.

Abigail Shaw of NorthStar Asset Management said during the meeting: “We estimate that last year over 80% of independent shareholders voted yes on this proposal therefore telling Mr Zuckerberg and the board that they are unhappy with the current arrangement.

“Shareholders continue to have no resource against the board or management when scandals pull down shareholder value.

“It is no secret that our company has struggled in the past two years due to a seemingly endless stream of controversies and data breaches.

“These include critiques of the company’s likely role in proliferating fake news that affected the 2016 US election, stories that, quote, laid bare Facebook’s lax policies around the use and sharing of user information, and risked losing users’ trust in the platform and multiple allegations that the company’s communications app WhatsApp and even the Facebook platform itself facilitated the spread of hate in places such as Myannmar (Burma) and India, which led to violence and aided in genocide.

“These examples illustrate the risk to a company when a board is formed by the CEO to meet his needs and is primarily composed of insiders or other affiliated people, rather than truly independent directors who would provide proper management in the oversight, to protect shareholders and investments.”

Preliminary results indicated that a total of seven activist motions were rejected, including a majority voting system and proposals to ensure ideological diversity on the board.

“At a time when there is little public trust in Facebook, it is navigating a regulatory landscape that is changing quickly,” said Jonas Kron of Trillium Asset Management.

“It is at a time like this that we need two different people in these two distinctly different leadership positions.”

In closing remarks, Mr Zuckerberg did not address calls for him to reduce his power directly, instead repeating his goals to make Facebook more transparent, and speaking about its future plans to make the social network more privacy-focused.

“We’re fighting to do the right things every day,” he said.

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