Facebook shareholders urge greater transparency, answers on election interference.
Russian election interference, hatred on its platform spark alert
Facebook lost more than $60 billion in market capitalization over the past couple of days after reports that Cambridge Analytica, a data consulting firm used by President Donald Trump’s campaign, was given the information of 50 million Facebook users without their permission.
Here’s what the average Facebook user may have in common with some large Facebook shareholders: They, too, want answers. And those shareholders are calling for change, with a couple of proposals they hope will end up on the ballot at the company’s shareholder meeting this year.
The Cambridge Analytica news is just the latest crisis for the social networking giant, which has been grappling with its role in the spreading of fake news and ads by Russian trolls, who last month were indicted for interfering with the 2016 U.S. presidential election.
Among the concerned institutional shareholders is New York State Common Retirement Fund, which holds 6.7 million shares of Facebook (worth $1.1 billion as of Tuesday’s close). One of the nation’s largest pension funds, it was a lead filer of a shareholder proposal in December that urges Facebook to establish better policies for addressing election interference and hate speech, and to provide shareholders with reports “reviewing the efficacy of its enforcement of its terms of service related to content policies.”
“The company’s got to come clean,” said Michael Connor, executive director of Open Media and Information Companies Initiative, a nonprofit that works on socially responsible investing and shareholder engagement. “It’s in chaos.”
Open MIC helped draft the shareholder proposal, which was co-filed by Arjuna Capital, Illinois State Treasurer Michael Frerichs as fiduciary for the state’s holdings in Facebook, and Harrington Investments, a Napa-based invest-
ment firm.
“Content policies appear reactive, not proactive,” the shareholder proposal reads. “As such, Facebook is embroiled in a string of controversies that have demonstrated the broad potential for misuse of its platform to spread lies, propaganda, and hate.”
Connor knows Facebook’s stock ownership structure means CEO Mark Zuckerberg holds the majority of the voting rights to the Menlo Park company, but “what we’d really like is for (the) company to recognize that these are substantial issues, and you need to engage with shareholders.”
Facebook executives have said in the past few days that a Cambridge University professor who collected Facebook user information through a personality-prediction quiz app, then shared it with Cambridge Analytica,
deceived Facebook into thinking the data was being collected for academic research. The professor has said he updated his app’s user terms to disclose he would be selling the data.
The other shareholder proposal, submitted in October by Trillium Asset Management on behalf of the Park Foundation — which owns about 73,000 Facebook shares — calls on the company to “establish a Risk Oversight Committee to better review Facebook’s impact
on society and how to mitigate risks.”
About this proposal, Connor said, “It’s clear the company needs to establish better governance.”
On Facebook’s board, the directors tasked with governance are Marc Andreessen, Reed Hastings and Peter Thiel.
In an interview with the New York Times earlier this month, Thiel acknowledged shortcomings on his part when it comes to Facebook’s problems.
“The board’s role is to help think about some of the medium- and longerterm problems coming around the corner,” Thiel told the Times. “We were far from perfect in doing that.”
Connor said the institutional shareholders have not heard anything from Facebook regarding their proposals, but since the company has not indicated opposition, he is expecting them to appear on the ballot, perhaps in June. The company has not announced the date of its next shareholder meeting. When reached with questions about the proposals Wednesday, a Facebook spokeswoman said the company would have no comment.
“They seem to think that they can deal with this all as public relations issue,” Connor said. “And the stock market is telling them it’s not.”
Facebook shares closed Wednesday up 0.7 percent at $169.39, after tanking Monday and Tuesday.