Mark Zuckerberg didn’t sleep well last night.
After reporting below-expectation earnings for the second quarter Wednesday afternoon, Facebook shares plummeted 20 percent in post-market hours, the worst single-day drop in the company’s history. The stock crash wiped away Facebook’s market value by $120 billion (that is equivalent to the Ukraine’s 2017 GDP, the market value of Salesforce and two-thirds of the total market loss, adjusted for inflation, during the 1929 Black Friday).
On a personal level, Zuckerberg’s fortune evaporated by $16 billion in one day. And yet, he has bigger problems to worry about.
This month, Trillium Asset Management, a Facebook investor owning about $10 million worth of company shares (after Wednesday’s crash), drafted a proposal to fire Zuckerberg as the company chairman, criticizing his “mishandling” of crises like the Cambridge Analytica data breach and the Russian meddling in U.S. elections.
Trillium seeks to replace him with an independent hire, citing that Facebook’s peer tech giants—Google, Twitter, Microsoft and Apple—all have separate CEOs and chairpersons. More broadly, 59 percent of the S&P 1500 companies have separated these two roles.
“Facebook is entering a new phase as a company,” Jonas Kron, a senior vice president at Trillium, told Observer. “Facebook transitioning from a heavy monetization model to a more mature, slow-growth stage. Every major tech company went through similar transitions. That’s exactly why it can benefit from having an independent chairman to provide a broader big-picture view and guidance.”
The proposal is the second time major investors have urged Zuckerberg to step down as chairman. The first proposal came in 2017 but didn’t make it to the shareholder voting stage.
But Kron said he is hopeful that Facebook might accept the proposal, even if it didn’t win majority shareholder votes this year, given Facebook’s track records of handling such suggestions.
Last year, Trillium filed a proposal to urge Facebook to take more explicit responsibility on the company’s social impact. The proposal didn’t win majority votes at the shareholder meeting, but Kron said the company adopted the proposed changes a few weeks later.
Speaking of social impact, one day before Facebook’s Q2 earnings release, BuzzFeed News published an internal memo that Zuckerberg’s outgoing security chief Alex Stamos sent around the company in March shortly after the Cambridge Analytica scandal erupted.
In the memo, titled “A Difficult Week,” Stamos said Facebook’s problems were a result of “tens of thousands of small decisions made over the last decade.”
“We need to deprioritize short-term growth and revenue and to explain to Wall Street why that is OK. We need to be willing to pick sides when there are clear moral or humanitarian issues. And we need to be open, honest and transparent about our challenges and what we are doing to fix them,” he wrote.
Stamos has confirmed he’ll be leaving Facebook by next month. According to the memo, his departure was not directly related to the Cambridge Analytica scandal but a result of a year-long internal reorganization that left him with fewer responsibilities.
On the other hand, alarming as it was, Facebook’s steep stock crash only took the company back to where it was in April, when Zuckerberg and his chief operating officer Sheryl Sandberg were busy touring the world to apologize for Cambridge Analytica. Over a longer time frame, Facebook’s current share price is still seven percent higher than a year ago.