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Facebook Inc. founder Mark Zuckerberg should step down as board chairman and make way for new oversight of how the company protects user data, according to the investment adviser to New York City’s pension funds, which own about $895 million in shares of the social media giant.
New York City Comptroller Scott Stringer said a board revamp is needed to restore investor confidence following revelations that Cambridge Analytica, a political consulting firm that worked on President Donald Trump’s election campaign, obtained the private data of some 50 million Facebook users.
Separating Zuckerberg’s combined role as chief executive and board chair would give him more time to focus on running the company, Stringer said in a March 27 letter to Susan Desmond-Hellmann, Facebook’s lead independent director. Stringer wants the board to bring on at least three new independent and diverse directors and set up a committee to oversee data privacy policies and risks.
The letter, first reported by The New York Times, also said the board should be able to claw back executive pay after “violations of law, regulation, or company policy.”
Facebook didn’t immediately return a request for comment.
Stringer said the Cambridge Analytica revelations worsened long-standing investor concerns about Facebook’s “insular” board of directors.
He said shareholders’ "true level of concern” is masked by the company’s dual-class stock structure, which gives common shareholders such as the New York City pension funds the majority of the company’s stock but a minority of its voting power. Another class of stock lets Zuckerberg control the vote.
Most of the shares Zuckerberg doesn’t control voted in favor of an investor’s proposal to get rid of the super-voting powers last year, according to a Bloomberg analysis of company disclosures.
Stringer’s letter said most common shareholders also voted in 2017 for an independent board chair and against the election of all three company executives sitting on the board, including Zuckerberg.
The addition to Facebook’s board of recently retired American Express Co. CEO Kenneth Chenault, one of the few black chief executives at a top U.S. company, was seen as “a positive step” in terms of relevant experience, independence, and diversity. “But more rapid and aggressive board refreshment is urgently needed,” Stringer wrote.
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