Funds Back Proposal to Remove Zuckerberg as Facebook Chairman

By Deepa Seetharaman

Several public funds with holdings in Facebook Inc., including New York City's pension funds, are backing a shareholder proposal to push out Chief Executive Mark Zuckerberg as chairman of the social-media giant's board of directors.

The state treasurers of Rhode Island, Illinois and Pennsylvania, as well as the New York City comptroller are joining the shareholder proposal previously filed by Trillium Asset Management in June, the state officials said in a release on Wednesday.

The announcement has no practical effect on Mr. Zuckerberg and his position as both CEO and chairman because he has a lock on the bulk of Facebook's supervoting shares, each of which gives him 10 times the votes of average shareholders. According to Facebook's latest proxy, his share of the voting power among Facebook investors was 59.9%.

Still, the news heightens scrutiny of the company's corporate governance after a string of missteps and controversies, and reflects a view among at least some investors that Mr. Zuckerberg needs additional support guiding the company.

Trillium's proposal called on Mr. Zuckerberg to relinquish his role as chairman given Facebook's mishandling of several controversies that have enveloped the company in recent years, including the spread of misinformation on the platform and its role in promoting violence in countries like Myanmar. Most recently, Facebook revealed a data breach that hurt 30 million accounts.

"An independent board chair is essential to moving Facebook forward from this mess, and to reestablish trust with Americans and investors alike," said New York City Comptroller Scott Stringer in a statement.

Mr. Stringer oversees the city's more than $195 billion pension fund, including 4.7 million shares in Facebook as of the end of March 31. Pennsylvania Treasury holds 38,737 shares of Facebook. Rhode Island owns 168,230 shares of Facebook. The company overall is worth nearly $460 billion.

Facebook shares are down about 27% since July, when the company projected weaker-than-expected revenue growth. Several key executives, including the cofounders of Instagram and WhatsApp, have left the company following tussles with Mr. Zuckerberg and other senior Facebook leaders.

A similar proposal to split Facebook's chairman and CEO roles has gained support from outside investors in the past. In 2017, slightly more than 50% of votes cast favored splitting the roles, after excluding the shares held by 13 executives and board members, including Mr. Zuckerberg, the release on Wednesday said.

The proposal will next be put to a vote at the company's shareholder meeting in May 2019.

Write to Deepa Seetharaman at Deepa.Seetharaman@wsj.com

(END) Dow Jones Newswires

October 17, 2018 11:32 ET (15:32 GMT)

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