Exclusive: The Facebook investor Trillium Asset Management has drawn up a new proposal to oust Mark Zuckerberg as chairman.

Trillium wants to appoint an independent chairman, citing Facebook's "mishandling" of crises like the Cambridge Analytica data scandal. Other prominent investors support this plan.

But the chance of it becoming a reality is slim. A similar proposal in 2017 was popular among independent investors but was crushed because of Zuckerberg's voting power.

Activist investors will be emboldened by Facebook's brutal second-quarter earnings, however, which could indicate that a sequence of scandals is catching up with the company.

Facebook previously said appointing an independent chairman would create "uncertainty, confusion, and inefficiency."

Ten months before Facebook's next shareholder meeting, an investor has drawn up a new proposal to oust Mark Zuckerberg as chairman of the social-networking giant.

The proposal, which reflects the strong feeling among Facebook investors that governance changes are essential, was written by Trillium Asset Management, which manages about $11 million (£8.4 million) in Facebook stock.

It was filed before Facebook released a brutal second-quarter earnings update on Wednesday, which sent the firm's share price tumbling by nearly 24%, wiping as much as $148 billion off its value.

Trillium's proposal, if approved by investors including Facebook's management, would require the company to appoint an independent chairman, breaking up Zuckerberg's dual role as CEO and chairman.

"A CEO who also serves as chair can exert excessive influence on the board and its agenda, weakening the board's oversight of management," the proposal says.

"Separating the chair and CEO positions reduces this conflict, and an independent chair provides the clearest separation of power between the CEO and the rest of the board."

Trillium is far from alone. Business Insider spoke with five other shareholders last month who control $3 billion of Facebook stock. They also want an independent chairman, like there is at Apple, Google, Oracle, Twitter, and Microsoft.

What the proposal describes as Facebook's "mishandling" of scandals is cited as the reason the change is necessary. Crises mentioned include meddling in the 2016 US election, the Cambridge Analytica data scandal, and the recent situation in Myanmar, where Facebook users were accused of inciting violence.

Trillium hopes the proposal will attract the support of other shareholders. A similar proposal to oust Zuckerberg as chairman was put forward last year and rejected, despite 51% of independent investors voting in favor of the change.

This is a symptom of Facebook's dual-class share structure. Class B shares have 10 times the voting power of class A shares, and it just so happens that Zuckerberg owns more than 75% of class B stock.

It means he has more than half of the voting power at Facebook and therefore the ability to swat away investor proposals. This makes the chances of Trillium's proposal becoming reality extremely slim.

Facebook declined to comment. The company has previously said splitting Zuckerberg's role in two would create "uncertainty, confusion, and inefficiency in board and management function."

A Facebook protester on Capitol Hill. AP

But activist investors will be emboldened by Facebook's disastrous second-quarter earnings. Revenue and user growth missed Wall Street's expectations, which could indicate that the sequence of scandals in recent years is catching up with the company.

Trillium's early proposal shows how serious shareholders are about change, according to Michael Connor, the director of Open Mic, an organization that helps shareholders campaign to improve governance at some of America's biggest companies.

"Most corporate governance experts maintain that having an independent chair is simply a very good idea. Filing the proposal early gives Zuckerberg and the company — as well as shareholders — plenty of time to contemplate the issue," he said. "Agreeing to the proposal would be a very big step for Zuckerberg and other members of Facebook’s board, so it’s a great idea to give them time to think through."

Here's Trillium Asset Management's proposal in full:

Resolved: Shareholders request the Board of Directors adopt as policy, and amend the bylaws as necessary, to require henceforth that the Chair of the Board of Directors, whenever possible, be an independent member of the Board. This independence policy shall apply prospectively so as not to violate any contractual obligations. If the Board determines that a Chair who was independent when selected is no longer independent, the Board shall select a new Chair who satisfies the requirements of the policy within a reasonable amount of time. Compliance with this policy is waived if no independent director is available and willing to serve as Chair.

Supporting Statement:

Facebook CEO Mark Zuckerberg has been Board Chair since 2012. His dual-class shareholdings give him approximately 60% of Facebook’s voting shares, leaving the board, even with a lead independent director, with only a limited ability to check Mr. Zuckerberg’s power. We believe this weakens Facebook’s governance and oversight of management. Selecting an independent Chair would free the CEO to focus on managing the Company and enable the Chairperson to focus on oversight and strategic guidance.

The Council of Institutional Investors argues:

Having an independent chair helps the board carry out its primary duty – to monitor the management of the company on behalf of its shareowners. A CEO who also serves as chair can exert excessive influence on the board and its agenda, weakening the board’s oversight of management. Separating the chair and CEO positions reduces this conflict, and an independent chair provides the clearest separation of power between the CEO and the rest of the board.

Facebook has resisted recent shareholder requests to separate these roles. In 2017, according to our calculations, a similar proposal received the support of 51% of the votes cast when excluding the shares of 13 executives and board members. However, the board has not acted on this important signal from its non-insider shareholders.

Google, Microsoft, Apple, Oracle, and Twitter have separate CEO and chairperson roles. More broadly, 59% of the S&P 1500 separated these roles as of April 2018.

We believe this lack of independent board Chair and oversight has contributed to Facebook missing, or mishandling, a number of severe controversies, increasing risk exposure and costs to shareholders. Examples from past years include:

Russian meddling in U.S. elections

Sharing personal data of 87 million users with Cambridge Analytica

Data sharing with device manufacturers, including Huawei that is flagged by U.S. Intelligence as a national security threat

Proliferating fake news

Propagating violence in Myanmar, India, and South Sudan

Depression and other mental health issues, including stress and addiction

Allowing advertisers to exclude black, Hispanic, and other "ethnic affinities" from seeing ads.

In apologies, Mr. Zuckerberg has stated, "We didn’t take a broad enough view of our responsibility." This broader view is what an independent Board Chair would provide, which we believe would benefit the company, its shareholders, and its global community of users.

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