Led by the Shareholder Association for Research and Education (SHARE), a group of investors representing US $2.7 trillion in assets under management, is urging Meta Platforms shareholders to support moves to establish an independent board of directors and address long-standing governance and oversight gaps at the company.
By determining what content people see on their social media feeds, Meta—the parent company of Facebook and Instagram—wields outsized influence. If left unchecked, this influence will continue to have significant impacts on the welfare of users, the stability of society, and the long-term position of the company.
With this in mind, a group of shareholders has written to Meta Board Members calling on fundamental reforms to the governance of the company. They say these reforms are needed to protect shareholders’ rights and safeguard the company and its investors from increasing financial, regulatory, legal, and reputational risks.
“Considering the myriad risks Meta Platforms is facing, the Board of directors must establish an effective system of accountability and oversight to protect users’ welfare and shareholders’ long-term value” said Sarah Couturier-Tanoh, Manager of Shareholder Advocacy at SHARE.
“This starts by nominating truly independent directors and implementing the right governance reforms before regulators are required to step in.”
Meta claims its board committees are composed entirely of independent directors, but the group has called this into question in a public challenge filed with the US Securities Exchange Commission. The group notes that Board member Marc Andreessen was sued in 2016 for allegedly assisting Meta CEO Mark Zuckerberg to implement a stock structure that gave him even more power. Board member Peggy A. Alford was appointed just two years after being hired as Chief Financial Officer and Head of Operations for the Chan Zuckerberg Initiative, Mr. Zuckerberg’s personal charity.
The shareholders asked the Board not to re-nominate Marc Andreessen and Peggy A. Alford as directors in a letter sent privately to the board chair in March. Their letter stated that these two Board members, along with additional departing member Peter Thiel, should be replaced by three new, highly qualified independent directors. Mr. Andreessen and Ms. Alford, however, were re-nominated by the company.
“Director independence ensures the board represents the interests of all shareholders, not entrenched management. We urge all shareholders to withhold their votes from Mr. Andreessen and Ms. Alford,” said Anthony Schein, Director of Shareholder Advocacy at SHARE.
The letter also proposed to separate the role of CEO and Board Chair, both of which are currently occupied by Mark Zuckerberg. A combined Chair and CEO role weakens the key checks and balances of sound corporate governance. Given the lack of board independence, as well as mounting regulatory and public scrutiny of the Company, this arrangement is particularly imprudent.
“It is the CEO’s role to run the company, and it is the Board Chair’s role to provide independent oversight of the CEO,” said Illinois State Treasurer Michael Frerichs. “There is an inherent conflict of interest when the same person occupies both roles.”
Finally, this group of shareholders is asking the Meta Board to do away with its dual-class share structure that sees one class of shares having greater control and voting rights than the class of shares offered to the general public. Under this existing structure, Mark Zuckerberg owns only 14% of Meta shares, but controls 58% of the Company’s voting shares.
A shareholder proposal filed in 2020 requested the Board of Directors eliminate this dual-class structure. This request received 88.2% support from independent shareholders. Ironically, the existing dual-class structure of Meta allowed the Board to ignore these voters.
“Given the company’s response to recent controversies and its inaction to implement widely-supported governance related proposals, we are not confident that the current governance structure serves the long-term interests of the company or its stakeholders, including investors,” said Caroline Boden, Director of Shareholder Advocacy at Mercy Investment Services.
“Implementing the responsible governance best practices outlined in the letter would be a step in the right direction to ensuring that Meta is equipped to assess, prevent, and mitigate risks now and into the future.”
“As a shareholder, Storebrand Asset Management believes that Meta Platforms must strengthen their accountability and adopt the best corporate governance practices. This will allow the company to better address various challenges, not least with respect to human rights and users’ data privacy risk. Meta needs a governance reform to develop a path forward that builds trust with users and society at large.” said from Kamil Zabielski, Head of Sustainable Investment at Storebrand Asset Management.
“Meta has such an outsized influence on societies globally through its platforms,” said Judy Byron, OP, Northwest Coalition for Responsible Investment. “The effects of poor governance, gaps in accountability and irresponsible behavior will be felt well outside the four walls of the company.”
Michael Connor, Executive Director of Open MIC, a nonprofit organization that works with shareholders on tech accountability issues, said: “Meta’s track record on so many critical governance and social issues is appalling. The company would be well-advised to listen – and listen hard – to the excellent advice these shareholders offer.”
For more information, please contact:
Amanda Watkins, Communications Manager, SHARE