A vocal group of Facebook investors is saying the time has come for the company to jettison the man who founded it, Mark Zuckerberg.
Zuckerberg, who serves as CEO of the company as well as the chairman of its board, underwent tough scrutiny of his leadership during May’s shareholders’ meeting.
At that meeting, investor James McRitchie said the company had become a “corporate dictatorship.”
“Mr. Zuckerberg, take a page from history. Emulate George Washington, not Vladimir Putin,” McRitchie said, according to Fortune.
“If ‘privacy is a human right,’ as stated by Microsoft’s CEO, then we contend that Facebook’s poor stewardship of customer data is tantamount to a human rights violation,” Christine Jantz, chief investment officer at NorthStar Asset Management, said during the meeting, CNN reported.
As noted by Business Insider, because of the way Facebook’s stock is divided, Zuckerberg and a few company insiders have the power to stave off almost any reforms proposed by the broader group of independent investors who often have millions riding on the fate of the company.
However, investors have not accepted the rejection of their reforms as the last word, and are meeting to plot a strategy that could lead to major changes at the social media giant.
In April, shortly after the Cambridge Analytica data scandal broke, Zuckerberg was asked if a revolt was brewing.
“Not that I’m aware of,” he said then.
Some of the concerns about Zuckerberg’s style are led by public officials who have invested pension funds with Facebook and are publicly questioning its leadership and direction.
“We have concerns about the structure of the board that the company doesn’t seem ready to address, which can lead to risks — reputational, regulatory, and otherwise,” said New York City Comptroller Scott Stringer.
Patrick Doherty, director of corporate governance at the comptroller’s office, said Facebook does not need a czar at its helm.
“The idea that there should be an autocrat in charge of a gigantic public company, which has billions of dollars of shareholder money invested in it, is an anachronism,” Doherty said. “It harks back to the 19th century when you had these robber barons who were autocrats and dictators.”
Doherrty said it’s not Facebook-bashing, but the kind of tough love the company needs to survive so it can pay a return to shareholders.
“We have the best interests of the company at heart because we are a major investor,” he said. “We have over $1 billion invested in Facebook at the moment, so we and the other investors coming forward believe that Facebook continues to be a good investment, but there are very serious problems that have to be dealt with.”
Michael Frerichs, the treasurer for the state of Illinois, is also on the bandwagon to remove Zuckerberg as chairman of Facebook’s board.
“He is not accountable to anyone, not the board or the shareholders, which is a bad corporate governance practice,” he said. “He’s his own boss, and it has clearly not been working.”
Frerichs is working with Natasha Lamb, a managing partner at Arjuna Capital, who said there was “very little confidence” in the job Zuckerberg was doing.
Not only do the Facebook investors want Zuckerberg to step aside as chairman, they want new rules that give real power to investors who have seen reform proposal routinely stifled at annual meetings of the company.
“When you combine the dual roles of chairman and CEO, plus that chairman and CEO personally owns a majority stake of that company, that’s a toxic brew. It means there’s very little room for any kind of dissent,” said Michael Connor, the director of Open Mic.
Facebook issued a statement saying it had no plans to change.
“We believe that our capital structure is in the best interests of our stockholders and that our current corporate governance structure is sound and effective,” the statement said, saying that removing Zuckerberg from either of his two roles would cause “uncertainty, confusion, and inefficiency in board and management function.”
Dylan Sage, the managing director of Baldwin Brothers, said sooner or later, an event will take place that will force Facebook’s hand.
“If you continue to see more Cambridge Analyticas pop up on the platform, or Facebook skewing elections, or create hate crimes and ethnic cleansing around the world, then you will see social unrest to the point that regulatory bodies come in and mandate change,” he said.
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