Troubles for Facebook Chairman and CEO – Mark Zuckerberg – seem to be mounting continuously. This time it’s the Facebook shareholders who have accused Zuckerberg of running the company “essentially as a dictatorship”. In the latest SEC Filing on April 12, shareholders have made some astonishing revelations against Zuckerberg.
Moreover, the shareholders have made several proposals wanting Zuckerberg to step down from his chair. These proposals are likely the preparations for Facebook’s upcoming shareholder meeting next month on May 30.
Facebook is already facing the heat of its investors after several data-breaches reported in last one year. Some of the major Facebook controversies include the Cambridge Analytica scandal, Russia meddling in the U.S. elections, fake news scandal, and much more.
The shareholders’ proposals note that too-much controlling power in Zuckerberg’s hands is hurting the company’s image. One of the proposals seeks the appointment of an independent board chair. Trillium Asset Management says:
“We believe this lack of independent board Chair and oversight has contributed to Facebook missing, or mishandling, a number of severe controversies, increasing risk exposure and costs to shareholders”.
The shareholders also explain how Zuckerberg controls 60% of Facebook’s voting shares thereby weakening the company’s governance.
“His dual-class shareholdings give him approximately 60% of Facebook’s voting shares, leaving the board — even with a lead independent director — with only a limited ability to check Mr. Zuckerberg’s power…We believe this weakens Facebook’s governance and oversight of management.”
Facebook Board Stands in Support of Zuckerberg
Note that this is not for the first time Facebook facing such a situation. Back in 2017, shareholders had submitted similar proposals asking Zuckerberg to step down. However, the Facebook board defended Zuckerberg’s position saying that it is in the best interest of the company if he continues as both – the CEO and the chairman.
“We do not believe that requiring the Chair to be independent will provide appreciably better direction and performance, and instead could cause inefficiency in board and management function and relations,” wrote Facebook.
Thus, it looks like there’s little in the control of shareholders at this stage, to bring any decisive changes in the company operations.
Also, one of the activist shareholders noted the falling investors’ confidence in the company. The trust in the company has gone down drastically with multiple privacy lapses reported in the last year. Shareholders also asked Facebook to submit a “Content Governance Report” seeking details of necessary steps initiated to avoid future data breaches.
The board, however, rejected this proposal saying that the company is already transparent about its content policies. Thus, it doesn’t need to justify the shareholders any further.
Zuckerberg’s Security Spending Doubled Last Year
In another report by Forbes, Facebook spent a whopping $22.9 million on the security of Mark Zuckerberg in 2018. This security expenditure was more than double in comparison to the spending in the previous year in 2017.
Zuckerberg’s security costs were $9 million in 2017, $6 million in 2016, and $5 million in 2015. The company notes that these costs cover security at Zuckerberg’s “residences and during personal travel”.
Besides, Zuckerberg Facebook COO Sheryl Sandberg also received personal security compensation in 2018. Nearly, $2.9 million were spent to cover her personal security costs.
Facebook Experience Outages
Last Saturday, April 13, Facebook experienced outages with its server going down for a few hours. In addition to the native Facebook platform, WhatsApp and Instagram also face similar outages. Both of these popular platforms are also owned by Facebook.
A report from Business Insider suggests that nearly 9000 people complained about this issue across Europe and Asia. One of the Facebook spokespeople apologized the users for the inconvenience caused. Last month on March 14, Facebook experienced similar technical issues.
Finding itself in an inexplicable situation after several such incidents, Facebook has turned its attention towards exploring the decentralized blockchain technology for future use.