From Jason Kint, is the CEO of Digital Content Next, a trade association representing publishers and Kathleen Day, an author and a former Washington Post business reporter who is a now full-time lecturer at Johns Hopkins University’s Carey Business School.

Mark Zuckerberg and his fellow board members at Facebook—now calling itself Meta Platforms, Inc.– aren’t doing their job to protect shareholders. 

They habitually fail to manage risk, despite having rechristened their audit committee as the “audit and risk oversight committee” under pressure from shareholders four years ago. A group of investors now plans to revisit the issue at the next annual shareholder meeting on May 25th, where they will ask Zuckerberg– the founder, chairman and CEO– and the rest of the board to conduct an independent review of the board’s track record in weighing dangers to the company….

The company describes the mandate of its audit-and-risk committee as one of helping “the board of directors in its general oversight of our accounting practices, system of internal controls, audit processes and financial reporting processes.” This description ignores the larger reputational and legal dangers that a real risk committee would address and shows the name change was, as many suspected, window dressing–hence the latest proposal. It reflects the mindset that causes Zuckerberg and his fellow directors to fall short again and again in addressing practices that erode the company’s value—not to mention the flow of accurate information in society—and democracy itself. 

This shareholder season, Facebook investors are asking fellow shareholders to vote “yes” on a proposal that the board conduct an independent review of their performance on risk. Despite the power advantage Zuckerberg and a group of allies wield through their special stock status, perhaps the company’s directors will be shamed into action, as they were four years ago. This time, maybe, they will seriously probe the board’s track record on risk, and for all shareholders, not just for those who hold an elite class of company stock.  

To date, however, there has been zero change in company behavior. Instead, Facebook spent months and millions of dollars to change its name to Meta. The market, as it should, increasingly mistrusts the ability of the company to manage risk on behalf of all shareholders: the collapse of its stock in February– by a quarter of a trillion dollars ­– was the biggest recorded drop ever of a single firm’s overall value in a single day. Even with some recovery since then, the fall signals the market is coming to fully realize the company’s business model of using customer information in ways they don’t expect or consent to is more than unethical. It’s bad business.  

…

Major shareholders continue to highlight ways founder Mark Zuckerberg and the other directors waste company assets. In perhaps the most notable example, Facebook paid $5 billion to federal regulators, rather than the $100 million or so its attorneys argued was the “maximum possible civil penalty,” to settle charges on the leaking and illegal selling of Facebook’s customer information to Cambridge Analytica.  Why pay such a hefty premium with shareholders’ money? 

Apparently to shield Zuckerberg from being personally named in the charges and settlement, according to investor lawsuits now playing out in Delaware. Loss of customer trust is a key risk for Facebook, one that lawsuits and whistleblowers allege Zuckerberg and fellow directors have used market dominance and influence to ignore in favor of meeting quarterly earnings targets. Last week’s boost from earnings—which still leaves the company’s stock well below its historic highs—won’t last if the company doesn’t fix its core issue: risk.