Facebook shareholders pressed for checks on Mark Zuckerberg's power. They failed

Investors to vote on limits for CEO's authority

By Seth Fiegerman, CNN Business
Justin Sullivan/Getty Images

Facebook CEO and co-founder Mark Zuckerberg

(CNN) - A growing number of lawmakers and Facebook insiders are raising concerns about whether the company, and its CEO Mark Zuckerberg, have too much power. On Thursday, Facebook shareholders made a similar case to Zuckerberg and other Facebook executives.

Facebook investors voted on eight stockholder proposals presented at the company's annual shareholder meeting on Thursday, including multiple recommendations to put checks on Zuckerberg's ironclad grip on the company he founded.

Each of the stockholder proposals were ultimately voted down, as Facebook recommended.

Zuckerberg has the majority of voting power over Facebook, thanks to his ownership of a special class of stock -- Class B -- that comes with 10 votes per share. Zuckerberg also serves as the chairman of Facebook's board of directors.

After more than two years of scandals swirling around the company, some shareholders argue Facebook's corporate governance needs to change.

One proposal calls for Facebook to appoint an independent board chair -- the absence of which, shareholders argue, "contributed to Facebook missing, or mishandling, a number of severe controversies."

Another stockholder proposal calls for Facebook to eliminate its Class B shares, paving the way for shareholders to limit Zuckerberg's power and "hold management accountable." As shareholders put it in the proposal, "Fake news, election interference, and threats to our democracy -- shareholders need more than deny, deflect, and delay."

"Shareholders continue to have no recourse against the board or management when scandals pull down shareholder value," Abigail Shaw, with NorthStar Asset Management, said in her remarks presenting the latter proposal at the meeting Thursday. "We are at a vital impasse for our company."

When asked by an attendee about these proposals to limit his control over the company, Zuckerberg effectively deflected by repeating a call for an updated regulatory framework for how companies like Facebook address difficult issues.

"I don't think that people overall would want companies to have so much unilateral authority to make decisions over speech and elections and privacy," Zuckerberg said at the event. "I think the big question that we need to answer is: what is the right framework, whether it's regulation or industry bodies, that will enable us to solve the specific issues we're grappling with?"

It's not the first time Zuckerberg has faced investor concerns about his power. For years, shareholders have put forward proposals to eliminate Zuckerberg's disproportionate voting rights.

At the annual shareholder meeting last year, one investor in attendance went so far as to claim Facebook was at risk of becoming a "corporate dictatorship." At the meeting Thursday, Natasha Lamb of Arjuna Capital struck a similar note, lamenting what she called Zuckerberg's "failing autocracy."

But the latest slate of stockholder proposals comes at a time when Facebook and its tech peers are confronting greater antitrust concerns.

Rep. David Cicilline, the chairman of the House Antitrust Subcommittee, has called for an antitrust investigation into Facebook, with a focus on its acquisitions of Instagram and WhatsApp, both of which now have more than a billion users.

Earlier this month, Facebook cofounder Chris Hughes called for Facebook to be broken up and raised concerns about Zuckerberg's "unchecked power." Shortly after, Alex Stamos, Facebook's former chief security officer, said his old boss should "give up" some of his power and hire a new CEO.

One shareholder proposal notes the growing "calls for the company to be broken up," and asks that Facebook's board bring on advisors to "study strategic alternatives." One of the options the proposal suggests the board consider: selling off "one or more subsidiaries."

Yet, it's precisely the power Zuckerberg is being criticized for having that all but ensured each of these proposals would ultimately fail, as versions of them have in prior years.

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