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Giant social networks Facebook (NASDAQ: FB) hold its annual meeting of shareholders on May 30. In anticipation of this meeting, Facebook has released its proxy statement, which details the proposals that will be the subject of a vote. The company has already been facing increasing investor agitation in recent years due to a myriad of scandals. In addition, the usual – and unsuccessful – calls to CEO Mark Zuckerberg to voluntarily give up his majority voting power.
However, in an astonishing twist of events, a shareholder proposal goes so far as to demand that Facebook be unlinked. Some politicians have been pushing this argument for months and it seems that some shareholders are in agreement.
Source of the image: Facebook.
To break is difficult
"Shareholders of Facebook, Inc. (" Facebook ") ask the board of directors to begin an orderly process of recruiting advisors to study strategic alternatives and authorize a committee Independent directors evaluate these alternatives as part of the exercise of their fiduciary responsibilities, in order to maximize shareholder value., "the proposal reads.
Facebook has grown exponentially over the years and has accumulated incredible market share and power, which has led to calls for the dissolution of the company. Management's response to the ongoing crises seems "poorly informed", according to the justification of the proposal. "It seems that Facebook may be too big and complex to be managed effectively," writes the shareholder who presents the information. The proposal notes that controversy has weighed on the price of Facebook action, which has lost about 24% of its value in the first 11 months of 2018. Consumer confidence in the company has also dropped .
In order to maximize shareholder value, the proposal asks Facebook to consider canceling Zuck's supervised class B shares and / or "selling one or more subsidiaries".
Facebook responds
Of course, Facebook opposes the proposal and the board of directors recommends shareholders to vote against it. The board argues that under Zuckerberg's leadership, the company "has established a history of creating value for our shareholders and managing significant opportunities and challenges". Facebook says it's now focused on solving the major social issues the company is facing, creating new experiences, supporting third-party companies trusting Facebook and more seamless communication.
There is no possibility for the proposal to be accepted because Zuck will vote alone to reject it. While the young CEO sold part of his stake to fund his philanthropic efforts, he still holds 53% of the voting rights. Including the shares of co-founder Dustin Moskovitz, for which Zuckerberg obtained irrevocable voting power in a settlement several years ago, the total number of voting rights of His Zuckness was increased to 57, 7%.
If Facebook is to be disassociated, it will not be a shareholder proposal. Action should come from government officials or regulators.
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