Treasurer Magaziner, Investors Renew Call for Facebook’s Zuckerberg to Step Down as Board Chair
Rhode Island General Treasurer Seth Magaziner, as part of the group of investors that led the 2019 shareholder proposal at Facebook seeking an independent board chairman, today released its findings of proxy voting data, which reveals which mutual funds joined the supermajority (68 percent) of Facebook’s outside shareholders who voted against management’s opposition of an independent board chair. The proxy voting data is based on fund N-PX reports that were filed with the U.S. Securities and Exchange Commission in 2019.
“We believe that Facebook’s lack of independent board chair, along with inadequate board governance, has contributed to the mishandling of several ongoing controversies,” said Treasurer Magaziner. “Adopting an independent board chair structure will help diversify Facebook’s leadership and could help the company begin to re-build trust by incorporating additional accountability mechanisms into its governance structure.”
Major institutional investors, including Vanguard, Blackrock, MFS, AllianceBernstein, American Funds, BNY Mellon, Goldman Sachs, John Hancock, JPMorgan, Putnam, and State Street voted in support of the proposal for an independent board chair to lead Facebook.
In contrast, Morgan Stanley, T. Rowe Price, Fidelity Investments, Dimensional Funds, Neuberger Berman, Schwab, Invesco, and Legg Mason, despite the litany of controversies and governance failures,voted in line with management’s recommendation to support Mr. Zuckerberg’s unified power as both CEO and Chair of the company’s board, while also he also holds a controlling bloc of shares.
“While Mark Zuckerberg has served as both chairman of the board and CEO, the company has faced congressional scrutiny of a number of missteps – from the role of its platform in propagating misinformation to releasing the personal data of tens of millions,” Connecticut Treasurer Shawn T. Wooden said. “A company as vast and as powerful as Facebook should be structured to ensure that there are appropriate checks and balances between the board and management.”
Investors also announced that they have re-filed the shareholder proposal again this year, which will be voted on at Facebook’s 2020 Annual Shareholder Meeting.
Evidence continues to come in that having the same person be the chair and the CEO is deeply problematic. For example, in PWC’s 2019 annual director survey, 57 percent of directors who sit on a board with a unified chair/CEO reported it is difficult to voice dissent.
“Now is the time for change,” said Illinois State Treasurer Michael Frerichs. “Facebook’s independent investors agree that it’s time for the company to separate the Board Chair and CEO roles. Right now, Mr. Zuckerberg is both Board Chair and CEO, serving as his own boss, and clearly it’s not working. The Board needs to be led by a strong, independent voice tasked to provide real oversight over management, address governance failings, help restore trust in the company, and better protect shareholders’ interests. We hope the company will use this as an opportunity to take a decisive step toward building a more successful, sustainable company for the long-term.”
Recently, Facebook lost its place in the top 10 in Interbrand’s annual Best Global Brands report, falling to 14th place with the estimated value of its brand declining 12% to $39.9 billion.
“There is no check-and-balance at Facebook without an independent board chair – and Mark Zuckerberg’s totalitarian grip as both CEO and Board Chair must end,” said New York City Comptroller Scott M. Stringer. “Facebook’s unrelenting turmoil shows why independence and accountability matter – and why power should not be consolidated around one person. Outside shareholders have sounded the alarm on the need for real oversight and governance reforms, and it’s time for Facebook to listen.”
“While Mark Zuckerberg has served as both chairman of the board and CEO, the company has faced congressional scrutiny of a number of missteps – from the role of its platform in propagating misinformation to releasing the personal data of tens of millions,” Connecticut Treasurer Shawn T. Wooden said. “A company as vast and as powerful as Facebook should be structured to ensure that there are appropriate checks and balances between the board and management.”
“Facebook’s original motto was to “move fast and break things” but what has really been broken is the trust independent shareholders have in Facebook’s governance model that clearly isn’t working, and effectively lets Mark Zuckerberg be his own boss” said Pennsylvania State Treasurer Joe Torsella. “Shareholders deserve an independent board chair to provide real oversight for the company. It’s time for Facebook to change by accepting better governance and oversight, and to rebuild the public trust it has lost over the past few years.”
“Time has shown the wisdom of the majority of Facebook’s outside shareholders in calling for an independent board chair,” said Jonas D. Kron, SVP, Trillium Asset Management. “Morgan Stanley, T. Rowe Price, Fidelity Investments, Dimensional Funds, Neuberger Berman Schwab, Invesco, and Legg Mason should seriously reconsider their position on the proposal and how they will vote at the 2020 Annual Meeting.”