Loading ...Facebook investors have called on the companyโs chief executive Mark Zuckerberg to step down as chairman,ย following reportsย that the companyย hired a public relations firmย to smearย its critics by drawing linksย to George Soros.
The attack on Mr Zuckerberg is set to complicate the daunting challenge facing Sir Nick Clegg, Facebook’s new global head of policy and communications, whoย joined last month and has been asked to conduct a review of Facebook’s use of lobbying firms.
Jonas Kron, a senior vice president atย Trillium Asset Management, a US investor which owns an ยฃ8.5m stake in Facebook, last night called on Mr Zuckerberg to step down as board chairman in the wake of the report.
โFacebook is behaving like it’s a special snowflake,โ he said. โIt’s not. It is a company and companies need to have a separation of chair and CEO.โ
Both Mr Zuckerberg and Sir Nickย have been under pressure following reports Facebook hired Definers, a Republican public relations firm, toย help repairย its battered reputation followingย intense criticism of the social media platform’s handling of a scandal over Russian interference in the 2016 US elections and the Cambridge Analytica scandal.
Definers allegedly encouraged the depiction of Facebook’s critics as anti-Semites and had published news articles criticising Facebookโs competitors. The business has also been accused of attempting to encourage journalists to report that anti-Facebook groups were linked to Mr Soros.
In a call with journalists on Thursday, Mr Zuckerberg denied knowing that his business had hired the firm. โAs soon as I learned about this, I talked to our team and we are no longer working with this firm,โ he said. He has also asked Sirย Nickย to launch a review of Facebook’s use of political lobbying firms.
Nevertheless, Mr Kron said the new revelations about Facebook’s use of Definers offered fresh reasons for Mr Zuckerberg to relinquish his dual role as chairman and chief executive.
โThe latest report should remove any lingering doubts that some may have had,โ he said.
Mr Zuckerberg has retained a high level of control over the social networking business which he founded in 2004 due to his combined role andย his ownership of a stake representingย 60pc of the companyโs voting shares.
Investors claimย that Mr Clegg faces a difficult task repairingย Facebook’s reputation due toย his unfamiliarity with Silicon Valley.
Julie Goodridge, chief executive of Facebook investor NorthStar Asset Management which owns over 50,000 shares in the company,ย called the appointment of Mr Clegg to investigate Facebookโs lobbying โcrazy.โ
โI don’t think you can appoint someone who is essentially still subservient to the board and subservient to top level management,โ she said. โYou can’t expect that person to come in and really have the kind of power that Zuckerberg, Sandberg, Peter Thiel and the other board members have. What powers is this guy really going to have?โ
Mr Kron said he was pleased that Mr Clegg would review Facebookโs lobbying efforts, but added that the move was โinsufficient.โ He characterised the appointment of Mr Clegg as a โwhack-a-moleโ move by Facebook which didnโt address the larger issue of a lack of an independent board chair.
In the call on Thursday evening, Mr Zuckerberg said that he had asked Sir Nick to review the businessโ lobbying operations. The former Deputy Prime Minister will report to Facebookโs chief operating officer, Sheryl Sandberg.
Facebook investor Natasha Lamb, a managing partner at Arjuna Capital, warned that the combined role of chairman and chief executive means that Facebook can avoid properly fixing problems inside the company.
โThat concentration of power creates a lot of defensiveness within the company,โ she said. โItโs an exercise in hiding that there is a problem rather than admitting that there is a problem and setting a roadmap to fixing it.โ
Ms Goodridge warned that if Mr Zuckerberg standsย down as chairman,ย Facebookโs share price is likelyย to drop.
She calledย for a change in Mr Zuckerbergโs Class B voting shares, which have 10 votes per share rather than the single vote for each Class A share.
โRegardless of who shows up at board meetings, Mark still has all the power to control the company,โ she said.
A combined chief executive and chairman role has become common in Silicon Valley as it allows founders to retain control of businesses, even after they go public.
Elon Musk held both roles at electric car manufacturer Tesla until an agreement with the US Securities and Exchange Commission in October forced the company to appoint a separate board chairman.
