The Business Insider reported that a plan to fire Mark Zuckerberg as chairman of Facebook is gaining steam. The stock-owner proposal if it passes, will leave Zuckerberg as just the CEO of the social media company. The plan to fire the head honcho of Facebook comes on the heels of its staggering loss of $119-billion on Thursday.
The proposal has been drawn up 10 months before the next shareholder’s meeting at Facebook. The first signs of stockholder rebellion comes after Facebook suffered the largest one-day loss in U.S. market history.
On July 26, 2018, Facebook became the first company to lose over $100 billion worth of stock in one day. It fell from nearly $630 billion to $510 billion, a 19% loss, after disappointing sales reports.
Trillium Assets Management which manages about $11 million in Facebook stock said in its proposal that an independent chairman is needed to break up Zuckerberg’s conflicting dual role as chairman and chief executive officer.
According to Business Insider the proposal says: “A CEO who also serves as chair can exert excessive influence on the board and its agenda, weakening the board’s oversight of management. Separating the chair and CEO positions reduces this conflict, and an independent chair provides the clearest separation of power between the CEO and the rest of the board.”
Business Insider also quoted Jeff Henriksen, managing partner at Thorpe Abbotts Capital as saying: “The perceived narrative surrounding Facebook has changed after yesterday’s earnings announcement. The market seems to be questioning the quality of growth seen in the past.”
Zuckerberg himself lost more than $15 billion in net worth in one day and is no longer among the top five billionaires in the world.
The proposal charged that the lack of an independent board chair and oversight contributed to Facebook “missing, or mishandling, a number of severe controversies”.
One such severe controversy happened in March 2018, when whistleblowers revealed that personal information from over 87 million Facebook users was sold to Cambridge Analytica, a political data analysis firm that had worked for Donald Trump’s presidential campaign. T
The data was collected using an app created by Global Science Research. While approximately 270,000 people volunteered to use the app, Facebook’s API also permitted data collection from the friends of app users.
When the information was first reported Facebook tried to downplay the significance of the breach, and attempted to suggest that the stolen data was no longer available to Cambridge Analytica.
However, with increasing scrutiny, Facebook issued a statement expressing alarm and suspended Cambridge Analytica, while review of documents and interviews with former Facebook employees suggested that Cambridge Analytica was still in possession of the data.
The other controversy is that of a Russian company buying more than $100,000 worth of Facebook ads during the 2016 presidential election. Special Council Robert Mueller, contacted Facebook subsequently to the company’s disclosure that it sold ads to a Russian Spy Agency-linked company (Internet Research Agency), and the Menlo Park-based company has pledged full cooperation in Mueller’s investigation, and began with providing all information about the advertisement buys by the Russian government, including the identities of the individuals and companies who made the purchases.
Facebook’s dual-class share structure which gives Facebook Class B share-owners 10 times the voting power of Class A shares may prevent the proposal to remove Zuckerberg from gaining steam, as Zuckerberg owns 75 percent of the Class B stocks.