Give Each Share an Equal Vote

Resolution Text

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: In 2019, Facebook was fined $5 billion by the Federal Trade Commission for mishandling users’ personal information. This followed a tumultuous year of scandals that has resulted in the loss of users, decline in user confidence, and included a one-day stock price drop that wiped off “more than $119bn … [from] Facebook’s market value” in July 2018. The public scandals that have caused this loss in shareholder value came from management and Board decisions that have not protected shareholder investment.

In allowing certain stock more voting power, our company takes public shareholder money but does not provide all shareholders an equal voice in our company's governance, and therefore severely limits shareholders’ ability to provide effective feedback to management and the board. Founder Mark Zuckerberg controls over 53% of the vote, though he owns less than 13% of the economic value of the firm.

Without equal voting rights, shareholders cannot hold management accountable. This is exemplified by the 2016 attempt by Facebook to create a non-voting class of stock. Described as a move to ensure that Mr. Zuckerberg retained control of our Company, the new class of stock was approved at the annual meeting despite the fact that almost 1.5 billion shares of stock voted AGAINST its creation. Only threat of a lawsuit “by shareholders who claimed that conflicts of interest and other behind-the-scenes discussions tainted a board decision to approve the creation of a new class of shares” was able to incite reversal of the plan.

Facebook’s 10-K describes the risk of the current share system: “Mr. Zuckerberg is entitled to vote his shares … in his own interests, which may not always be in the interests of our stockholders generally.”

The Council for Institutional Investors (CII) recommends a seven year phase-out of dual class share offerings. The International Corporate Governance Network supports CII’s recommendation “to require to a time-based sunset clause for dual class shares to revert to a traditional one-share/one-vote structure no more than seven years after a company’s IPO date.”

Fake news, election interference, and threats to our democracy -- shareholders need more than deny, deflect, and delay from our Company’s management. We urge shareholders to vote FOR a recapitalization plan for all outstanding stock to have one vote per share.

Lead Filer

Mari Schwartzer
NorthStar Asset Management

Co-filer

Mr. Patrick Doherty
New York State Common Retirement Fund