In a shocking development at Facebook, the world’s largest social networking site, a section of shareholders have sought the removal of CEO Mark Zuckerberg from the board of directors. All of the shareholders who have sought Zuckerberg’s ouster are members of the online consumer watchdog group SumOfUs. Since Zuckerberg is both the CEO and a member of the board of directors, the shareholders have stated that such a combination of roles weakens the corporate governance and deals a blow to the value received by shareholders.
A recent report in Venture Beat has cited Lisa Lindsley, who is the capital markets advisor for SumOfUs, who asked everyone to sign a petition ‘requesting Facebook to improve its corporate citizenship’. Apparently, the petition has been signed by 3,33,000 people out of which 1,500 are also the company’s shareholders. In a statement, Lindsley also stated that they had been able to file the petition because four individual SumOfUs members had enabled them.
First, Facebook is not unique in having a CEO who is also a member of the board of directors. Companies like Amazon, IBM, and Tesla have the same corporate governance structure. Second, besides the matter of precedent being taken care of, Zuckerberg also owns the majority of the company’s shares. He doesn’t have much to worry, therefore. He can easily strike the proposal down either by himself or in conjunction with other board members. Third, Facebook and Zuckerberg are intertwined and to most of the people and users at large, one usually represents the other. Besides, Facebook’s financial performance is not a bother at this moment. With a quarterly profit of $3.57 billion, more than double that of last year in the same time period, Facebook has seen strong growth under Zuckerberg’s leadership.
Facebook boasts of 1.86 billion users using its service monthly. Mark Zuckerberg has been a member of the board of directors since 2012. It is no wonder, therefore, that Zuckerberg is widely seen as a successful CEO. Lindsley went on to state that the proposal was advisory in nature and would be voted upon at the next investor’s conference. Facebook has been under the scanner recently for being allegedly ineffective in stopping the flow of fake news.