Facebook investors lodge protest vote against board

Facebook's Mark Zuckerberg and Sheryl Sandberg faced a significant rebellion from ordinary shareholders, with more than a quarter voting against their re-appointment to the board, as the social network struggles with the fallout from data leaks and disinformation.

More than 60 per cent of the ordinary shareholders also backed proposals to move to a “one vote per share” system, hitting back at the dominance of the founder and insiders whose voting power means they carry every vote.

Class A shareholders have just one vote per share, but class B stock, held by management and directors, is entitled to 10 votes a share. A significant proportion of shareholders with class A ordinary stock withheld their support for the Facebook chief executive and its chief operating officer, if it was assumed that all management and directors voted in favour of each board member, according to a filing released on Tuesday.

The votes took place at a tense annual meeting last Thursday, where one shareholder described Facebook as a “corporate dictatorship”, another was removed from the room for heckling, while a plane trailing a banner from an anti-Facebook campaign group, reading “You Broke Democracy”, flew over the venue.

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Some 547 million votes were cast against the reappointment of Mr Zuckerberg, out of a total of class A stock of 2 billion present at the meeting. Ms Sandberg, who oversees policy and advertising for the company, received even less support, with 550 million votes cast against her reappointment to the board.

Control

Mr Zuckerberg controls more than 51 per cent of the votes, however, despite owning only about 14 per cent of the company. Together, all executive officers and directors hold more than 60 per cent of the votes, because of the power of the class B shares.

Including both classes of stock, Mr Zuckerberg and Ms Sandberg were each re-elected with 86 per cent of the vote.

Independent directors Susan Desmond-Hellmann, chief executive of the Gates Foundation; Reed Hastings, chief executive of Netflix; and investor Peter Thiel were also subject to rebellions, with between 380 million and 480 million votes cast against each.

One shareholder proposal for management to initiate a plan to push class B owners to relinquish their “disproportionate rights” received 63 per cent of the vote of ordinary stockholders, despite the Facebook board recommending against it. Another proposal for a “simple majority vote” was backed by 61 per cent of class A votes.

Trillium Asset Management's proposal to establish a risk oversight committee, in the wake of scandals such as the massive data leak to Cambridge Analytica, received more than a third of class A votes cast. The proposal for Facebook to publish a content governance report, as it grapples with inappropriate content on the platform, received the backing of 30 per cent of class A votes. Some 29 per cent of class A votes were cast in favour of a proposal asking Facebook to publish its median pay by gender, to show the gap in what it pays men and women.

Facebook did not respond to a request for comment on the meeting results.

– Copyright The Financial Times Limited 2018