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Four powerful institutional investors on Facebook have co-tabled a shareholder proposal to fire Mark Zuckerberg as chairman after his "mismanagement" of several scandals this year.
New York Comptroller Scott Stringer, State Treasurer of the State of Illinois, Michael Frerichs, Rhode Island State Treasurer Seth Magaziner and Pennsylvania Treasurer Joe Torsella join forces to put pressure on Zuckerberg.
They put their name on a proposal, initially filed by activist investor Trillium Asset Management, asking Facebook to appoint an independent chairman over Zuckerberg. The proposal was first reported by Business Insider in July.
Their support gives much more weight to the demand, since they control more than a billion dollars in Facebook shares. It also indicates growing support for a radical change in Facebook's governance.
Trillium's proposal – if approved by investors, including Facebook's leadership at next year's annual shareholders meeting – would require the company to appoint an independent chairman, thus ending the dual role of Zuckerberg as CEO and President.
A similar plan was proposed last year, but it was crushed despite the fact that 51% of independent investors voted in favor of the change. This is the result of Facebook's two-class sharing structure. Class B shares have 10 times the voting rights of Class A shares and Zuckerberg happens to hold more than 75% of class B shares.
This means that he has more than half of Facebook's voting rights and, therefore, the ability to eliminate investor proposals. This reduces the chances that Trillium's proposal will become reality.
The new president is essential to help Facebook out of its "mess"
The troubles among investors are increasing, however.
"We need Facebook's insular conference room to seriously engage with the real risks (reputation, regulation, and risk for our democracy) that impact society," said Stringer, controller of New York City, in a statement. "An independent chairman of the board is essential to evolve Facebook and get out of this mess and restore trust with Americans and investors."
The Rhode Island Magaziner added: "Without an independent chairman of the board, the board's oversight of the company remains inadequate, as evidenced by recent mismanagement of several controversies. an independent chairman of the board of directors … is in the best interest of Facebook shareholders in the long run. "
Trillium's proposal cites a series of scandals as the reason for which change is necessary. The crises mentioned include the interference in the 2016 US election and the Cambridge Analytica data scandal, while last month's data breach, which affected 30 million users, also was mentioned by Trillium in an email to Business Insider. You can read Trillium's proposal in its entirety here.
Stringer and Frerichs, from Illinois, have already spoken to Business Insider and others about the need for a redesign. The Rhode Island Magaziner and Joe Torsella from Pennsylvania have not commented on Facebook yet.
Together, they manage $ 333.4 billion in public funds, including college pension and savings plans. Stringer oversaw about $ 895 million worth of shares on Facebook, while Frerichs had invested $ 35 million in June of this year, before the company 's stock price peaked after its brutal second quarter in July. Trillium had under management $ 11 million of Facebook shares.
Facebook declined to comment. The firm had previously said that returning Zuckerberg to the position of president would cause "uncertainty, confusion and inefficiency in the advisory and management functions".
SEE ALSO: More Business Insider coverage Facebook investors who demand a change:
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