Date
22 May 2018
Some investors are seeking an overhaul of Facebook's voting structure. CEO Mark Zuckerberg currently controls the majority of the company's voting power. Photo: AFP
Some investors are seeking an overhaul of Facebook's voting structure. CEO Mark Zuckerberg currently controls the majority of the company's voting power. Photo: AFP

Proxy adviser ISS recommends vote against Facebook’s Zuckerberg

Proxy adviser Institutional Shareholder Services recommended Facebook Inc. investors withhold support from five directors including chief executive Mark Zuckerberg, Reuters reports.

Facebook has come under scrutiny over the way it handles personal data after revelations that British consultancy Cambridge Analytica, which worked on Donald Trump’s 2016 presidential election campaign, improperly accessed the Facebook data of 87 million users.

In its report, ISS said Facebook “has been somewhat responsive during the controversy, but shareholders should continue to closely monitor data privacy issues”.

It suggested investors vote “for” shareholder proposals calling for the company to study establishing a board committee on risk management and to report on content management controversies, according to a copy of the recommendations seen by Reuters.

Both nonbinding proposals are meant to help Facebook address controversies such as its handling of customer data and privacy concerns. Proponents of both cited news reports they said showed the need for action.

Facebook urged investors to vote against both resolutions, saying its current approaches to risk management and community standards are adequate.

The world’s largest social network will hold its annual meeting on May 31 in Menlo Park, California.

ISS said investors should withhold support for Zuckerberg and chief operating officer Sheryl Sandberg, citing concerns over board nomination procedures.

The advisory firm suggested Facebook create a formal committee to nominate board candidates, as a way to ensure board accountability and to increase transparency and communications with shareholders.

It also recommended withholding support from three directors, incumbent compensation committee members, saying that it has pay concerns including on security costs for Zuckerberg, “which have increased substantially without clear explanation”.

ISS noted the company will not have an advisory vote on pay this year, warranting votes against the directors instead.

ISS recommended investors back three remaining director nominees.

Facebook founder Zuckerberg controls a majority of the company’s voting power. ISS recommended investors back non-binding shareholder proposals that would revamp its voting structure.

Meanwhile, Zuckerberg has agreed to meet the leaders of the European Parliament to answer questions regarding the Cambridge Analytica scandal.

“The founder and CEO of Facebook has accepted our invitation and will be in Brussels as soon as possible, hopefully already next week,” Antonio Tajani, president of the European Parliament, said in a statement on Wednesday. The American will meet party leaders and members of the civil liberties committee.

A hearing will also be organized with Facebook and other parties concerned, Tajani said, to carry out an “in-depth analysis of aspects related to personal data protection” and potential impacts on electoral processes in Europe.

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CG

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