Social media giant Facebook has been facing a pressure from many shareholders urging the removal of the founder and Chief Executive Officer (CEO) Mark Zuckerberg from the company’s board of directors. Demanding Mark’s expulsion, a watchdog group of shareholders known as Sum of Us has filed a proposal to replace him therefore with an independent chairperson who may take the company forward with higher corporate governance, stated Venture Beat. Mark Zuckerberg have been on the board since 2012.
The marketing website also quoted Intel’s former chairperson Andrew Grove as saying,” The separation of the two jobs goes to the center of the conception of an organization. So Is a company a sandbox for the CEO, or is the CEO a worker? If he’s an employee, he needs a boss, and that boss is that the board. The chairman runs the board. How will the CEO be his own boss?”
Mark Zuckerberg ’s removal reason
According to the reports by VentureBeat, this development came after 3,33,000 people filed a petition asking Zukerberg’s removal as the chairman of the board of directors while only 1,500 among that vast number were shareholders.
But on the other hand, this move won’t effect much the founder of Facebook as Zukerberg himself holds a substantial quantity of the company shares, and owns an necessary right within the decision making ways of the company.
Sum of Us claims that it is an organisation that’s committed to “curbing the growing power of corporations”. In its proposal, the organisation’s members propose that an “independent chairperson” be appointed who is able to “oversee the executives of the company, improve corporate governance. Set more responsible and pro-shareholder agenda.”
“In our view, shareholder worth is increased by an independent board chair who will give a balance of power between the CEO and the board and support robust board leadership. Independent board leadership is sorely required at Facebook following the board’s decision since in 2016 to approve a new capital structure. That reduced the rights of class A shareholders without requiring a majority vote of these shareholders,” the proposal reads.
Chief Executive Officer (CEO) Mark Zuckerberg
It also goes on to quote Facebook’s company governance score in terms of risk. “Facebook’s corporate governance score as of since January 23, 2017 was 10, the highest level of risk. This score is provided by Institutional Shareholder Services (ISS). An adviser to institutional investors relating to company governance risks of firms in their investment portfolios. ISS recommended a vote against directors Desmond-Hellman, Andreesen and Bowles at the since 2016 annual meeting for their role in the creation of class C shares, saying “the committee failing to dependably represent the interests of the holders of class A stock in negotiating a self-interested dealing. That was delivered to the board by the controlling shareholder.”
Hence Zuckerberg is the founder and CEO of Facebook and chairman of its board of directors. He also owns a large portion of Facebook’s shares. Sum of Us members’ proposal is unlikely to have any impact on Facebook’s decision-making process.
But this also goes to show that investors (at least some) maybe scared of Zuckerberg’s future decisions of the company.