Outside investors rebuke Facebook vote structure, tallies show

Facebook said roughly 1.29 billion votes were cast "for" a proposal that would have company move to a structure of one vote per share while 4.74 billion shares were voted "against" the proposal.

A 3D-printed Facebook like button is seen in front of the Facebook logo. (File Photo | Reuters)

BOSTON: A wide majority of outside investors at Facebook Inc backed a measure that would revamp its voting structure and end the supervoting rights of shares held by Mark Zuckerberg and others, seen as a rebuke to the chief executive of the world's largest social media company.

The measure did not pass, said Facebook, which released tallies indicating the result on Tuesday, and where Zuckerberg controls about 60 per cent of the company's votes. The company is under scrutiny over its response to data privacy concerns.

"There are a lot of outside voters who are not happy with what's going on there," said Dayna Harris, a partner at compensation consulting firm Farient Advisors.

A Facebook spokeswoman declined to comment on the filing, which followed Facebook's annual shareholder meeting last week where it described the outcome of the votes but did not give exact figures.

Facebook said roughly 1.29 billion votes were cast "for" a proposal that would have the company move to a structure of one vote per share and do away with the supermajority shares, while 4.74 billion shares were voted "against" the proposal.

Setting aside the roughly 4.48 billion votes controlled by Zuckerberg and other insiders as of April that presumably would have been voted against the proposal, Harris said, about 83 per cent of shares voted by outsiders supported the proposal - a higher level of support than shareholder measures usually receive.

Using a similar method, Harris also calculated Zuckerberg received support from only about 65 per cent of investors, much lower than the usual 90-per cent-plus support directors typically receive at big U.S. companies. Facebook Chief Operating Officer Sheryl Sandberg received a similarly low level of support from outsiders.

A similar shareholder proposal at last year's Facebook annual meeting received a comparable level of support, and opposition to Zuckerberg and Sandberg was also comparable.

Charles Elson, a professor at the University of Delaware who follows corporate governance, said the results show big investors are unhappy but stuck with Facebook's voting structure. "People are upset, but there's nothing they can do about it," he said.

Facebook has been under scrutiny from regulators and shareholders after it failed to protect the data of some 87 million users that was shared with now-defunct political data firm Cambridge Analytica.