In a proxy filing on Friday, shareholders proposed that Facebook's dual-class system be phased out and replaced with a "one share one vote" system.
Citing a parade of scandals last year followed by a months-long slide in the company's stock, the proposal argued that disproportionate control in the hands of CEO and chairman Mark Zuckerberg isn't in the best interests of shareholders. Facebook's stock collapsed in July of last year, losing around 40% of its value between July and late December.
Shares of Facebook have since recovered most of the lost value, but are still trading about 18% lower than they were prior to the July drop, and were trading just shy of $179 per share as of Monday.
The proposal to phase out Facebook's dual-class share structure is extremely unlikely to pass a vote, given the fact that CEO and chairman Mark Zuckerberg controls about 60% of voting shares. But it is one of several aimed at improving Facebook's governance and chipping away at Zuckerberg's iron grip over the firm, and includes one proposal to install a content governance system and another to replace Zuckerberg with an independent board chair.
The latter proposal was filed last year by hedge fund Trillium Asset Management with backing from a number of institutional shareholders, including large municipal and state pension funds. While not a filer in the "one share one vote" proposal, Trillium wrote in an email that "we support the One Share One Vote proposal because it is an important governance reform that Facebook should adopt."
For its part, Facebook countered that the dual-class share system "insulates our board of directors and management from short-term pressures" -- a common refrain among a growing number of companies, in particular tech firms, that have adopted the system on the idea that founders are in the best position to set the company's long-term course.
Lyft (LYFT) - Get Report , soon-to-go-public Pinterest Inc. and other large tech firms, including some that are int he IPO pipeline, have installed dual-class shares that grant the founders outsized control over votes. But the system is receiving heightened scrutiny from institutional investors, the SEC and major stock exchanges.
The "one share, one vote" issue will be voted on at Facebook's upcoming shareholder meeting on May 30.