Majority Action and Color Of Change Respond to Proxy Advisor Institutional Shareholder Services’ Recommendation to Facebook Shareholders to Withhold Support from Board Chair Mark Zuckerberg
ISS cites lapses in boardroom oversight and dysfunctional governance as leading to controversies undermining Facebook shareholder value
WASHINGTON — Today Majority Action and Color Of Change responded to proxy advisor Institutional Shareholder Services (ISS)’s recommendation to Facebook shareholders that they withhold their vote from chairman Mark Zuckerberg, as well as directors Sheryl Sandberg and Marc L. Andreessen, who has led audit and risk oversight, in light of the Cambridge Analytica data privacy incident and additional controversies threatening shareholder value.
ISS’s recommendation comes after Majority Action and Color Of Change filed an investor advisory calling for votes against chairman Mark Zuckerberg, due to Facebook’s repeated failures to address civil rights abuses and the dissemination of hate and discrimination on its platform, as well as signification breaches in user safety. The groups’ filing argues that Facebook’s insufficient response to cascading risks requires shareholders to check the sweeping control that Zuckerberg holds in his joint role of CEO and Chairman with 10-1 voting power.
Rashad Robinson, Executive Director of Color Of Change, said:
“Facebook’s governance structure is a threat to the civil rights of its Black users and to the financial interests of its shareholders. Leading proxy firm ISS’ support of our push for a “no” vote on Mark Zuckerberg’s nomination to the board is a sign of growing momentum to stabilize governance at Facebook and ensure legitimate oversight of the platform. This vote of confidence from ISS sends a clear signal to shareholders that the company must address the misinformation, discrimination, violent movements and data breaches that put users, especially Black users, at risk on Facebook, in order to ensure the long-term financial stability of the company.”
Eli Kasargod-Staub, Executive Director of Majority Action, said:
“With the near-constant headlines of Facebook’s failures, breaches, and risks, shareholders cannot be assured that the company will adopt the comprehensive reforms needed to restore confidence. Overwhelming majorities of independent shareholders of Facebook have already made clear their desires for stronger oversight through their support of resolutions calling for an independent chair and one-share, one vote, and ISS joins the call in recommending that shareholders must now withhold support from Zuckerberg’s re-election to the board.”
ISS, the largest US proxy voting advisor, also recommended that shareholders vote against directors Sheryl Sandberg and Marc L. Andreessen. Along with Zuckerberg, COO Sandberg has been implicated in the company’s response to the Cambridge Analytica data breach, and Andreessen is a long-tenured member of the audit and risk oversight committee, which is responsible for overseeing and managing the many risks that the company has been facing in recent years, including controversies around civil rights abuses and hate speech on its platform that have dramatically damaged the company’s reputation with the public and shareholders alike.
Given Zuckerberg’s 10-1 voting power, ISS also renewed the call for equal voting rights for all classes of stock in order to enhance shareholder rights which would enable them to hold Zuckerberg and the rest of the board accountable for their dysfunctional governance and management of the risks to long-term shareholder value. Last year, following a similar recommendation from ISS, proposals to allow one-vote per share and allow for a simple majority vote — both efforts to limit concentrated power — each garnered over 80 percent of independent shares. Thirty-five percent of outside shareholders, including Facebook’s largest outside shareholder, Vanguard, withheld votes from re-electing Zuckerberg last year.