The advisory firm Institutional Shareholder Services has recommended Facebook investors withhold support from five directors including CEO Mark Zuckerberg and vote in favor of shareholder proposals aimed at improving the company’s response to problems like election interference and harassment. The proposals call for the company to study establishing a board committee on risk management and to report on content management controversies, according to a copy of the recommendations seen by Reuters.
Both nonbinding proposals are meant to help Facebook address controversies over its handling of customer data and privacy. Facebook urged investors to vote against both resolutions, saying its current approaches to risk management and community standards are adequate.
ISS said that investors should withhold support for Zuckerberg and COO Sheryl Sandberg due to concerns over board nomination procedures. The advisory firm suggested Facebook create a formal committee to nominate board candidates, as a way to ensure board accountability and to increase transparency and communications with shareholders.
It also recommended withholding support from three compensation committee members, writing that it has pay concerns including on security costs for Zuckerberg, "which have increased substantially without clear explanation." ISS noted the company will not have an advisory vote on pay this year, warranting votes against the directors instead.
Another proxy adviser, Glass Lewis recommended earlier that investors vote for Zuckerberg, but also backed the two shareholder proposals and recommended votes against three audit committee directors responsible for overseeing legal and regulatory matters. Glass Lewis said the audit committee had "failed to effectively fulfill its obligations to shareholders".
Facebook founder Zuckerberg holds a majority of voting rights in the company. ISS and Glass Lewis both recommended investors back non-binding shareholder proposals that would revamp its voting structure.
The annual shareholders meeting is planned for 31 May.
