Proposal 3* — Give Each Share an Equal Vote
RESOLVED: Shareholders request that our Board take all practicable steps in its control toward initiating and adopting a recapitalization plan for all outstanding stock to have one vote per share. This would include efforts at the earliest practicable time toward encouragement and negotiation with Class B shareholders to request that they relinquish, for the common good of all shareholders, any preexisting rights. This is not intended to unnecessarily limit our Board’s judgment in crafting the requested change in accordance with applicable laws and existing contracts.
By allowing certain stock to have more voting power than others, our company takes our public shareholder money but does not let us have an equal voice in our company’s management. Without a voice, shareholders cannot hold management accountable.
The holders of our company’s Class B common stock hold approximately 74% of the voting power, with Facebook founder Mark Zuckerberg personally controlling 55%. Yet the 2014 version of this proposal at our company won over 1 billion “FOR” votes, illustrating investor support of this issue.
GMI said that since the beginning Facebook’s poor governance had been an unmistakable warning sign for investors to take heed. GMI was concerned that a founder and board member dumped the vast majority of his shares. Since May 2012 the total company stock sales for Peter Thiel (and his various funds) had eclipsed $1 billion. Furthermore, top executives resigned in droves since our company went public.
Facebook’s board consisted of two inside directors, two large investors, and four more directors who either have substantial related party transactions with Facebook or were nominated to our board by Mr. Zuckerberg himself. When the board was criticized for a lack of diversity, its rather defiant response was to nominate Sheryl Sandberg— the company’s COO – to serve as director. This added another insider to the board, while, in the opinion of the Proponents, added no meaningfully independent voice of diversity to the board.
GMI said it’s hard to point to a single director who has the long-term interests of our company’s independent shareholders as their first priority. Furthermore, GMI’s report implies that the corporate governance practices of Facebook board do not appear to be well aligned with sustainable shareholder interests – it rated our company a “D”, then to dropped it to an “F” this year.
News Corp. is another company like ours. “If you are buying shares in [News Corp.], it’s buyer beware,” says Sydney Finkelstein, a professor at Dartmouth’s Tuck School of Business. “There is no management or leadership reason to have two classes of stock except to retain control.” The Council of Institutional Investors asked NASDAQ and NYSE to stop listing new companies with dual share classes.
Please vote to protect shareholder value:
Give Each Share An Equal Vote — Proposal 3*