Mark Zuckerberg’s Voting Stake Renders Shareholders Powerless

Shareholders have been asking Meta to change its voting structure since 2014.

Mark Zuckerberg smiles facing right.
Mark Zuckerberg has controlling voting power of Meta. Anadolu Agency via Getty Images

Meta (META)’s annual shareholder meeting went exactly how the company wanted yesterday (May 31). The 13 proposals filed by Meta shareholders, most of which asked the social media giant for additional reports and transparency, all failed to pass. This wasn’t a surprise, since CEO Mark Zuckerberg holds the majority of the Meta’s voting power.

The company requires a simple majority to pass a proposal. While Zuckerberg owns just 13 percent of Meta’s stock, he controls 61.1 percent of the vote because of the company’s voting structure. Meta has a two-tiered stock system that gives Class A stock one vote per share and Class B stock 10 votes per share. Zuckerberg owns 99.8 percent of the Class B stock available, according to the company’s proxy statement.

Meta asks its shareholders to trust that its board has their interests in mind. Our board of directors provides robust independent oversight and ensures that the interests of our shareholders are considered,” the company said in a statement. Other big shareholders include Vanguard, which controls 3.2 percent of the vote, BlackRock with 2.7 percent and Fidelity with 2.2 percent.

This structure has been around since Meta went public in 2012, but at the meeting, some shareholders expressed their dissatisfaction with the system that renders their votes useless. One proposal filed by NorthStar Asset Management, a Boston-based investment firm focused on social responsibility, requested the board adjust the voting system so every share has one vote, which would give Class A shareholders the same power as Class B ones. The proposal failed, though more than half of the votes that weren’t from Zuckerberg were in favor of it. It had the highest approval rating among all shareholder proposals yesterday.

Similar proposals to change the voting structure have been filed and failed every year since 2014, according to proxy documents with the U.S. Securities and Exchange Commission (SEC).

Google has a similar model to Meta, in which its Class B shares hold ten times the power of Class A stock. Founders Larry Page and Sergey Brin control 51.3 percent of the vote due to their ownership of Class B stock, according to SEC files. At Microsoft, every share has one vote. Vanguard owns the biggest stake with 8.2 percent of the vote. Apple also only allows one vote per share. Vanguard also has the biggest ownership stake in the iPhone maker, at 7.96 percent.

What do Meta shareholders want?

Meta’s system leaves shareholders repeatedly filing the same proposals which, despite never passing the vote, do indicate what shareholders are concerned about.

Openness about political activities

United Church Funds, a New York-based nonprofit, requested Meta report on its lobbying activities. What information Meta currently provides isn’t enough, said Matthew Illian, director of responsible investing at United Church Funds, during the meeting. The organization filed the same proposal last year, when it earned majority support from outside shareholders, according to a statement by United Church Funds.

Meta submits a lobbying report to the U.S. government every three months listing the political issues it directs money towards. In the three months ending April 20, the company spent $4.59 million on lobbying efforts, according to its report. Issues included the taxing of high-revenue companies; data transfers between the U.S. and E.U. (for which an Irish regulator fined Meta last month); and the Journalism Competition and Preservation Act, a bill that would require online platforms like Facebook to pay publications when users post links to their content on the platforms.

Data transparency

Many proposals filed this year ask Meta for additional disclosures and transparency, flagging the company’s reputation as an issue. Arjuna Capital, a Massachusetts-based investment firm, asked for a report on how Meta handles data with abortion-related law enforcement requests. Last year, the company complied with Nebraska prosecutors by providing private messages from a 17-year-old who allegedly planned and executed a late-term abortion. As a result, some users took to social media with the statement #DeleteFacebook. 

Protection of minors on social media

Proxy Impact, a shareholder advocacy group, filed a proposal asking for an annual report that will assess if Meta has improved in protecting children. In October, a U.K. court found that content on social media, including Meta’s platforms, contributed to a 14-year-old girl taking her life in 2017. “Year after year, Meta blocks resolutions to protect children,” said Beeban Kidron, a British children’s rights advocate, during the meeting. “I believe you can do better,” she said.

Mark Zuckerberg’s Voting Stake Renders Shareholders Powerless