According to a recent report, some Facebook investors are becoming tired of CEO Mark Zuckerberg’s style of running the company and may be considering a coup.
Just a few months ago, Facebook CEO Mark Zuckerberg testified before Congress about the Cambridge Analytica data scandal. Shortly before this, during a call with members of the media, including Breitbart News, one reporter asked Zuckerberg whether or not there had been a discussion amongst board members about replacing Zuckerberg as chairman of the company. Zuckerberg paused shortly and gave a short, clipped answer: “Not that I’m aware of.”
According to a recent report from Business Insider, that discussion amongst board members may have taken place. Scott Stringer, New York City’s comptroller, who is responsible for overseeing the investment of approximately $895 million worth of Facebook shares through city pension funds, recently told Business Insider: “We have concerns about the structure of the board that the company doesn’t seem ready to address, which can lead to risks — reputational, regulatory, and otherwise.” Doherty believes that Facebook’s current situation is one of the past that regularly has failed. “The idea that there should be an autocrat in charge of a gigantic public company, which has billions of dollars of shareholder money invested in it, is an anachronism,” Doherty said. “It harks back to the 19th century when you had these robber barons who were autocrats and dictators.”
Business Insider reports that through interviews with multiple investors, the two issues that consistently were brought up by investors were:
- They want Zuckerberg to step down as chairman and an independent executive to be hired in his place.
- Shareholders also want Facebook’s dual-class share structure to be abolished because they believe it concentrates too much power into the hands of Zuckerberg and his top team.
Michael Frerichs, the Illinois state treasurer who has invested $35 million in Facebook said that shareholders want Zuckerberg removed as a chairholder for a very simple reason: “He is not accountable to anyone, not the board or the shareholders, which is a bad corporate governance practice,” he said. “He’s his own boss, and it has clearly not been working.”
Michael Connor, the director of Open Mic, a group which helps shareholders campaign for better management of the companies they’ve invested in, stated: “When you combine the dual roles of chairman and CEO, plus that chairman and CEO personally owns a majority stake of that company, that’s a toxic brew. It means there’s very little room for any kind of dissent.”
Facebook, however, does not seem in any hurry to change their current operations. Following a proposal by shareholders to change the current share structure — which hadn’t been updated since 2009, three years before the company went public — Facebook stated: “We believe that our capital structure is in the best interests of our stockholders and that our current corporate governance structure is sound and effective.” When asked about replacing Zuckerberg as chairman, Facebook stated that such a move would cause “uncertainty, confusion, and inefficiency in board and management function.”
All of the investors interviewed assured Business Insider that they truly want what’s best for the company — and for many of them, that means removing Zuckerberg as CEO. “We have the best interests of the company at heart because we are a major investor,” Patrick Doherty said. “We have over $1 billion invested in Facebook at the moment, so we and the other investors coming forward believe that Facebook continues to be a good investment, but there are very serious problems that have to be dealt with.” Scott Stringer stated: “As long-term investors in Facebook, we want to make sure the company is strong,” while Michael Frerichs continued: “It’s about making sure the long-term viability of the company, and with changes in corporate governance, we can reduce some of the risk. ”
Michael Connor discussed the arrogance of Silicon Valley tech companies saying: “People think companies like Facebook are bulletproof, and they’re not. You had companies like AOL and Yahoo come and go. You’ve had people like Travis Kalanick, who was the co-founder and CEO of Uber, who has come and gone. These things can self-destruct.”