Meta (FACEBOOK, INC.) | Dual class capital structure at Meta (FACEBOOK, INC.)

Status
27.98% votes in favour
AGM date
Previous AGM date
Proposal number
4
Resolution details
Company ticker
FB
Lead filer
NorthStar Asset Management, Inc.
Resolution ask
Adopt or amend a policy
ESG theme
  • Governance
ESG sub-theme
  • Shareholder rights
Type of vote
Shareholder proposal
Filer type
Shareholder
Company sector
Technology
Company HQ country
United States
Resolved clause
RESOLVED:
Shareholders request that our Board take all practicable steps in its control to initiate and adopt a recapitalization plan for all outstanding stock to have one vote per share. We recommend that this be done through a phase-out process in which the board would, within seven years or other timeframe justified by the board, establish fair and appropriate mechanisms through which disproportionate rights of Class B shareholders could be eliminated. This is not intended to unnecessarily limit our Board's judgment in crafting the requested change in accordance with applicable laws and existing contracts.
Supporting statement
SUPPORTING STATEMENT:
Since its creation, Meta Platforms (“Meta”), formerly Facebook, has faced numerous headline-grabbing scandals, including controversies that have resulted in the loss of users, decline in user confidence, and a one-day stock price drop that wiped off “more than $119bn … [from] Facebook’s market value.”[1] Shareholders believe that proper governance reforms are needed to help the company avoid future scandals.
These controversies and allegations include criticism for its “lax position on political lies,” its role in Russia’s misinformation campaign during the 2016 U.S. election, data breaches, failing to prevent its platforms from being used to incite violence, and more. Most recently, CEO Mark Zuckerberg was sued over his alleged role in the Cambridge Analytica privacy scandal. The suit “alleges Zuckerberg was closely involved in envisioning and carrying out the framework on Facebook that ultimately allowed Cambridge Analytica to collect user data without consent...”[2]
Meta’s newest ventures into the metaverse generates myriad new risks for the company regarding data privacy, user harassment and abuse, cybersecurity threats, exploited user data, and more. Given the company’s history of issues with protecting user privacy, strong company governance is critical as the Meta moves forward into the new virtual world.
In another of its biggest scandals, in 2021 whistleblower Frances Haugen testified before the Senate to allege that Meta has consistently chosen to “maximize its growth rather than implement safeguards on its platforms, just as it hid from the public and government officials internal research that illuminated the harms of Facebook products.”[3] Haugen also noted that Mr. Zuckerberg, who currently controls over 58% of voting shares while owning only 13% of economic value of the firm, dictates the course of the company. Haugen noted that “there is no one currently holding Zuckerberg accountable but himself.”[4] Without equal voting rights, shareholders cannot hold management accountable.
Governance experts support the recapitalization sought by this proposal: the Council for Institutional Investors (CII) recommends a seven-year phase-out of dual class share offerings and the International Corporate Governance Network supports CII’s recommendation. Outsider shareholders have repeatedly widely supported this proposal, and ongoing scandals demonstrate the critical need for this governance reform.
We urge shareholders to vote FOR a recapitalization plan for all outstanding stock to have one vote per share.
[1] https://www.theguardian.com/technology/2018/jul/26/facebook-market-cap-falls-109bn-dollars-after-growth-shock
[2] https://www.cnbc.com/2022/05/23/meta-ceo-zuckerberg-sued-over-cambridge-analytica-privacy-scandal.html
[3] https://www.npr.org/2021/10/05/1043377310/facebook-whistleblower-frances-haugen-congress
[4] https://www.nytimes.com/2021/10/05/technology/facebook-frances-haugen-testimony.html

How other organisations have declared their voting intentions

Organisation name Declared voting intentions Rationale
EFG Asset Management For A vote FOR this proposal is warranted as it would convey to the board nonaffiliated shareholders' preference
for a capital structure in which the levels of economic ownership and voting power are aligned
Rothschild & co Asset Management For

DISCLAIMER: By including a shareholder resolution or management proposal in this database, neither the PRI nor the sponsor of the resolution or proposal is seeking authority to act as proxy for any shareholder; shareholders should vote their proxies in accordance with their own policies and requirements.

Any voting recommendations set forth in the descriptions of the resolutions and management proposals included in this database are made by the sponsors of those resolutions and proposals, and do not represent the views of the PRI.

Information on the shareholder resolutions, management proposals and votes in this database have been obtained from sources that are believed to be reliable, but the PRI does not represent that it is accurate, complete, or up-to-date, including information relating to resolutions and management proposals, other signatories’ vote pre-declarations (including voting rationales), or the current status of a resolution or proposal. You should consult companies’ proxy statements for complete information on all matters to be voted on at a meeting.