A group of shareholders of Facebook submitted a proposal to oust Facebook CEO Mark Zuckerberg from the Board of Directors of his own company. They have highlighted a number of reasons for such a call. If the proposal is approved by all the other shareholders, Zuckerberg could be looking at a sizeable loss of power.
The group of shareholders who conjured up the proposal is also incidentally part of a consumer watchdog group called SumOfUs. “SumOfUs is 12,243,161 people stopping big corporations from behaving badly,” reads the tagline of the website. Together, they have called for the exclusion of the Chair of the Board from the Board of Directors.
The Proposed Policy
They have listed two policy changes directed towards making the Chair of the Board an independent member. Firstly, “if the Board determines that a Chair who was independent when selected is no longer independent, the Board shall select a new Chair who satisfies the policy within 60 days of that determination,” instructed the shareholders. And secondly, in the absence of quality personnel willing to serve as the chair, the requirement shall be waved completely.
The proposal quoted Intel’s former chair Andrew Grove regarding the confusion of the role of the chairman. “The separation of the two jobs goes to the heart of the conception of a corporation. Is a company a sandbox for the CEO, or is the CEO an employee? If he’s an employee, he needs a boss, and that boss is the board. The chairman runs the board. How can the CEO be his own boss?” said Grove.
Balancing of Power
The share holders further reiterated the importance of having a balance of power. This can only happen if the CEO of the company distances himself from the board. Facebook Board of Directors was previously accused of being incompetent in representing the interests of Class A shareholders.
“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,” reads the press release. As a result, the company was recently given a corporate governance score of 10 by the Institutional Shareholder Services (ISS). The score suggested an increased level of risk, which is never good for the future of the company.
Facebook’s Past Mistakes
As a first step to rectify the score in the future, the shareholders have suggested Facebook to comply with their proposal to make the position of the chairman independent from the Board of Directors. The proposed initiative in the effective restructuring of the company came after Facebook got trapped in multiple criticisms in the past year. The social network was accused of influencing the outcome of the 2016 U.S. Elections by showcasing promoting fake news among its news feed. Facebook has also been found slacking in proper censorship and preventing hate speeches on its platform.
The shareholders were also quick to point out that Facebook has failed in implementing its own standards and guidelines in the recent times. Instead it has shamefully focused on generating ad revenue by targeting race as a weapon. Also, despite being a private organization, it has collaborated with government and other law enforcement agencies. Citing all these problems and more, the proposal invites all the shareholders to vote for the motion.