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Abu Dhabi, UAEMonday 17 December 2018

Shareholders call on Facebook's Zuckerberg to step down as chairman

The social media company's shares are down 21% since the start of the year

Earlier this year Facebook CEO Mark Zuckerberg testified on Capitol Hill in Washington about the company's use of user data. Now shareholders are calling for him to resign as chairman. Reuters
Earlier this year Facebook CEO Mark Zuckerberg testified on Capitol Hill in Washington about the company's use of user data. Now shareholders are calling for him to resign as chairman. Reuters

Facebook investors are calling on chairman and chief executive Mark Zuckerberg to step down after a New York Times investigation suggested the company hired a Republican-owned political consulting firm that “dug up dirt on its competitors” to smear critics.

“Facebook is behaving like it's a special snowflake,” said Jonas Kron, a senior vice president at Trillium Asset Management, a US investor with a stake in the social network, calling on Mr Zuckerberg to step down as board chairman after an investigative report on the company last week. “It's not. It is a company and companies need to have a separation of chair and CEO,” Mr Kron was cited as saying by The Telegraph.

Facebook class A shares are down 21 per cent year-to-date to $139.5 (Dh512) as of the close of trading on Friday. Mr Zuckerberg has lost $17.4 billion of his net worth so far this year, ranking him sixth on the Bloomberg Billionaires Index. Without Mr Zuckerberg, Facebook’s historical financials would have been valued at 40 per cent of the actual stock price when compared to the company’s competitors, Twitter, Snapchat and Match Group, according to Seeking Alpha.

There have been at least six attempts to remove Mr Zuckerberg as chairman since 2012, but these moves failed due to the dual class structure of the company. The dual class stock structure allows Mr Zuckerberg (through class B shares) to control 60 per cent of shareholder voting power.

Facebook’s top 20 investors include Vanguard, BlackRock, Capital Group, State Street Global, Morgan Stanley, UBS, Bank of New York Mellon and Goldman Sachs.

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Facebook is said to have hired Definers, a Republican public relations company to manage the fallout over Russia’s interference in the 2016 US presidential election and from the Cambridge Analytica scandal that mined personal information of Facebook users to sway voters. According to the media report, Definers is said to have portrayed critics of the social media giant as anti-Semites and linked anti-Facebook groups to billionaire George Soros.

On Friday, four Democrat senators wrote to Mr Zuckerberg, asking him to provide more details about Facebook’s lobbying activities, according to The New York Times. The lawmakers also inquired whether Facebook had ever used its own data and platform against critics.

“We need to know if Facebook, or any entity affiliated with or hired by Facebook, ever used any of the vast financial and data resources available to them to retaliate against their critics, including elected officials who were scrutinising them,” said Senator Amy Klobuchar of Minnesota, one of the Democrats who wrote the letter.

Billionaire co-founder of the software company Salesforce Marc Benioff said companies such as Facebook "are going to have to recognise that they have to change… and the CEOs have to change. And if they don’t change, those CEOs will be removed by boards and by shareholders".