- Independent Facebook investors voted overwhelmingly in support of proposals to fire Mark Zuckerberg as chairman and scrap the firm's share structure.
- According to the results of votes at Facebook's annual shareholder meeting last week, 68 percent of outside investors want the company to hire an independent chairman. The majority was up from 51 percent last year.
- Despite the revolt, the proposals did not pass because of Zuckerberg's voting control of the stock, which means he can swat away shareholder demands.
- "Arrogance is not a substitute for good corporate governance," said Michael Connor, who helped coordinate action among activist Facebook investors.
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The Facebook shareholder revolt just got bloody.
In a filing on Monday, Facebook revealed how investors voted on a raft of proposals at its annual shareholder meeting last week--and the results underline the unrest among outside investors.
According to an analysis of the results by Open Mic--an organization that works with activist shareholders to improve corporate governance at America's biggest companies--independent shareholders overwhelmingly backed two proposals to weaken Mark Zuckerberg's power.
Some 68 percent of ordinary investors, those who are not part of management or the board, want to oust Zuckerberg as chairman and bring in an independent figure to chair Facebook's board. This was a significant increase on the 51 percent who voted in favor of an almost identical proposal last year.
Shareholders are furious at the way Zuckerberg has handled a series of Facebook scandals, including election interference on the social network in 2016 and the giant Cambridge Analytica data breach last year. They think the company would benefit from an independent chairman holding Zuckerberg and his top team accountable.
Facebook's share price fell dramatically last year following the Cambridge Analytica disaster, while weaker than expected growth compounded the downturn. The stock has not fully recovered after hitting a high of $217.50 on July 25 last year. Shares plunged 7.5 percent to $164.15 on Monday following news of a potential antitrust investigation.
Furthermore, 83.2 percent of outside shareholders also backed a proposal to scrap Facebook's dual-class share structure. Currently, Class A shareholders have one vote per share, while Class B shareholders get 10 votes per share. Management and directors control Class B shares.
In fact, Zuckerberg happens to own more than 75 percent of Class B stock, meaning he has roughly 60 percent of the voting power at Facebook. He and colleagues voted down the independent chairman proposal and the dual-class share plans, meaning they were crushed despite the uprising from outside investors. Put another way, if Zuckerberg and his closest allies disagree with shareholders, they always have the trump card.
In a statement sent to Business Insider, Open Mic's executive director Michael Connor said the results send a clear message to Facebook management. "The results speak for themselves. Mark Zuckerberg and the Facebook board need to listen to the company's shareholders. Arrogance is not a substitute for good corporate governance," he said.
"Investors are clearly concerned and want change," added Jonas Kron, who runs activist shareholder Trillium Asset Management, which put forward the call for an independent chairman. "This level of support is rarely seen in shareholder proposals."
Business Insider has contacted Facebook for comment.