Pension fund wags finger at Facebook’s governance laws
ONE of Facebook’s investors intends to make waves about the social network’s corporate governance rules, which will hand shareholders negligible say in the company when it floats later this year.
Pension fund the California State Teachers’ Retirement System (CalSTRS) is planning to send a letter to the firm, which outlined its corporate governance structure last Wednesday in its IPO filing.
When Facebook goes public, Zuckerberg – who owns 28.4 per cent of the company – will control 56.9 per cent of the vote due to agreements with certain investors and the dual-class stock, which gives private shares ten times the voting power of publicly traded shares.
He also reserves the right to name his successor at Facebook, which as a controlled company does not need majority independent directors.
Janice Hester-Amey, a portfolio manager in CalSTRS’ corporate governance office, said: “We are in the beginning stages of talking to Facebook.
“Not that we want to tell Zuckerberg how to run his company… but it will be very hard to influence him except if he’s got some kind of a conscience.”
She added: “I think there should be some more respect for capital – no matter how brilliant you are.”
CalSTRS, which has a portfolio worth around $145bn (£91bn), invests in Facebook through two of its private equity managers and is likely to buy shares in the website’s public offering.
The second-largest US pension fund campaigned last year for companies to disclose their political donations.