Four powerful institutional Facebook investors have co-filed a shareholder proposal to take down Mark Zuckerberg as chairman following his "mishandling" of several scandals this year.
New York City Comptroller Scott Stringer, Illinois State Treasurer Michael Frerichs, Rhode Island State Treasurer Seth Magaziner, and Pennsylvania Treasurer Joe Torsella are joining forces to pile the pressure on Zuckerberg.
They have put their names to a proposal, originally filed by activist investor Trillium Asset Management, demanding that Facebook appoint an independent chairman above Zuckerberg. The proposal was first reported by Business Insider in July.
Their support gives the demand significantly more weight, given that they control more than a billion dollars in Facebook stock. It also points to an increasing base of support for sweeping governance change at Facebook.
Trillium's proposal — if approved by investors including Facebook's management at its annual shareholder meeting next year — would require the company to appoint an independent chairman, breaking up Zuckerberg's dual role as CEO and chairman.
A similar plan was put forward last year but it was crushed, despite 51% of independent investors voting in favor of the change. This is a result of Facebook's dual-class share structure. Class B shares have 10 times the voting power of class A shares, and it just so happens that Zuckerberg owns more than 75% of class B stock.
It means he has more than half of the voting power at Facebook and therefore the ability to swat away investor proposals. This makes the chances of Trillium's proposal becoming reality slim.
New chairman essential to helping Facebook out of its "mess"
Unrest among investors is growing, however.
"We need Facebook's insular boardroom to make a serious commitment to addressing real risks — reputational, regulatory, and the risk to our democracy — that impact the company," New York City Comptroller Stringer said in a statement. "An independent board chair is essential to moving Facebook forward from this mess, and to reestablish trust with Americans and investors alike."
Rhode Island's Magaziner added: "Without an independent board chair, the board's oversight of the company remains inadequate as evidenced by the recent mishandling of several controversies. Having an independent board chair... is in the best long-term interest of Facebook shareholders."
Trillium's proposal cites a series of scandals as the reason why the change is necessary. Crises mentioned include meddling in the 2016 US election and the Cambridge Analytica data scandal, while last month's data breach, which impacted 30 million users, was also noted by Trillium in an email to Business Insider. You can read Trillium's proposal in full here.
Stringer and Frerichs, from Illinois, have previously spoken to Business Insider and others about the need for an overhaul. Rhode Island's Magaziner and Pennsylvania's Joe Torsella have not previously commented on Facebook.
Together, they manage $333.4 billion in state funds, including pensions and college savings plans. Stringer oversaw about $895 million worth of Facebook shares, while Frerichs had $35 million invested as of June this year, prior to to the firm's stock price cratering after its brutal second-quarter in July. Trillium had $11 million of Facebook stock under its management.
Facebook declined to comment. The firm has previously said that removing Zuckerberg as chairman would cause "uncertainty, confusion, and inefficiency in board and management function."