Opening a new front at Facebook, Illinois State Treasurer Michael Frerichs, Rhode Island State Treasurer Seth Magaziner, Pennsylvania Treasurer Joe Torsella, and New York City Comptroller Scott Stringer today co-filed a shareholder proposal asking the Facebook board of directors to make the role of Board Chair an independent position. Doing so is best governance practice that will be in the interest of shareholders, employees, users, and our democracy.
The shareholder proposal, lead-filed by Trillium Asset Management in June, focuses on Facebook missing, or mishandling, a number of severe controversies including:
- Russian meddling in U.S. elections,
- Sharing personal data of 87 million users with Cambridge Analytica,
- Data sharing with device manufacturers, including Huawei that is flagged by U.S. Intelligence as a national security threat,
- Proliferating fake news,
- Propagating violence in Myanmar, India, and South Sudan,
- Depression and other mental health issues, including stress and addiction, and
- Allowing advertisers to exclude black, Hispanic, and other “ethnic affinities” from seeing ads.
- These filings come on the heels of Facebook’s latest controversy, a data breach affecting 30 million accounts. “Boards of directors should be a check on management teams, not a tool of them, and an independent Chair is essential to achieving that result. That’s why I’m joining this effort so that we can stand up for investors, and against the unchecked corporate power of Mr. Zuckerberg and the threat he currently represents to shareholder value,” said PA Treasurer Joe Torsella.
The proposal highlights that Google, Microsoft, Apple, Oracle, and Twitter have separate CEO and chairperson roles. More broadly, 59% of the S&P 1500 separated these roles as of April 2018. “Facebook’s board of directors was elected by shareholders to protect our interests by providing independent oversight of company management and its CEO. Without an independent board chair, the board’s oversight of the company remains inadequate as evidenced by the recent mishandling of several controversies. Having an independent board chair – separate from Mr. Zuckerberg’s role as CEO – is in the best long-term interest of Facebook shareholders, including the members of Rhode Island’s pension system,” said Rhode Island Treasurer, Seth Magaziner.
In apologies for the various controversies and damage to society, Mr. Zuckerberg has repeated stated, “We didn’t take a broad enough view of our responsibility.” This broader view is what an independent Board Chair would provide, which the Treasurers and Comptroller believe would benefit the company, its shareholders, and its global community of users.
This proposal comes after years of shareholder engagement. In 2017, according to our calculations, a similar proposal received the support of 51% of the votes cast when excluding the shares of 13 executives and board members. The proposal will be put to a vote at the company’s annual shareholder meeting in May 2019.