Meta Platforms should address inequality by helping to establish an ownership culture where all Americans are shareholders with a voice in corporate activity, especially at corporations where they are employed. Voting in favor of the shareholder proposal outlined below will send a message not only to Mark Zuckerberg but to all those who currently control America’s corporations, which have too frequently become wealth inequality generating mechanisms, serving the few at the expense of the many and a salubrious planet.
The first step in establishing an ownership culture is to highlight how incentive shares are currently distributed to employees. Because companies are required to report CEO-to-worker compensation ratios, we know that pay ratios at large public companies have gone from 21:1 in 1965 to 351:1 in 2020. We expect the incentive share ratio between named executives and employees to be even higher since most Americans hold no shares at all.
Just as we need to measure the current release of carbon dioxide before we can set limits to protect our environment, we need to measure the main source of wealth inequality before we can set guardrails to protect democracy, which is increasingly at risk as wealth inequality rises. Wider distribution of share ownership at corporations is of critical importance, not only in generating wealth but also as a source of distributed power within the firm and the larger society.
One measure of power within the firm is the distribution of voting power. At Meta Platforms, Mr. Zuckerberg has more voice, more voting power, than all employees and shareholders combined. Employees with little or no voice at work are less likely to develop the skills and resources necessary for participation in political life beyond the workplace. Political efficacy at work and society is discouraged by the dictatorial corporate governance structure of Meta Platforms.
Additionally, the products and services of Meta Platforms stimulate increased levels of discord and anxiety within society, rather than thoughtful engagement and community building. Building an ownership culture within Meta Platforms could move our company from a pariah to a central source for knitting society together around the values of democracy.
This proposal asks Meta Platforms to include a simple matrix, ideally using EEO-1 classifications, to report the stock ownership and associated voting power awarded to each tier of employees. It is only the first step in what is envisioned as multi-year process of moving Meta Platforms from enabling authoritarian systems to facilitating greater democracy.
For additional information on the causes and cures of wealth inequality, as well as the long bipartisan history of support for broadening employee stock ownership, see Having a Stake: Evidence and Implications for Broad-based Employee Stock Ownership and Profit Sharing.
In the first place, it is a point conceded that America, under an efficient government, will be the most favorable country of any kind in the world for persons of industry and frugality, possessed of moderate capital, to inhabit. It is also believed that it will not be less advantageous to the happiness of the lowest class of people because of the equal distribution of property.
— George Washington, letter to Richard Henderson, Mount Vernon, June 19, 1788
[FB: Rule 14a-8 Proposal, December 7, 2021]
[This line and any line above it – Not for publication.]
Proposal 4* – Address Wealth Inequality Through an Ownership Culture
Resolved: Meta Platforms Inc (“Company”) shareholders request the Board’s Compensation, Nominating and Governance Committee (“Committee”) issue a report annually assessing the distribution of stock ownership incentives throughout the workforce (such as but not limited to performance share units, employee stock purchase plans, restricted stock units, and options). The report should include a matrix, sorted by EEO-1 employee classification or another appropriate classification scheme with four or more categories chosen by the Committee, showing aggregate amounts of stock ownership granted and utilized by all U.S Company employees and including associated voting power, if any. The report should be prepared prior to or concurrent with issuance of the next annual proxy statement.
Supporting Statement: Wealth inequality in the United States has increased dramatically,[1] is widely recognized as a significant social policy issue,[2] and brings many problems, such as political polarization.[3] Employee ownership is key to addressing this social policy in a bipartisan manner.[4]
Providing stock ownership incentives to boards and executives but not to all U.S. company employees has led to glaring inequality. Our Company’s “pay ratio” is “small,” 96 to 1, because Mr. Zuckerberg’s “pay,” at his choosing, consisted almost entirely of costs related to personal security. A similar ratio comparing stock ownership by named executives with those of typical U.S. employees would be much higher at our Company and nationally at other companies.
From 1973 to 2018, inflation-adjusted wages for nonsupervisory American workers were flat. Meanwhile, a dollar’s worth of stock grew (in real terms) to $14.09. Hourly wages stagnated. Income from capital ownership accelerated. The top 10% of American households earned 97% of capital gains. Typical white families own nearly 10x the average Black family. Single women own only 36% of what typical men own. That gap is greater for women of color.[5] Strengthening employee ownership would help address these inequities.[6]
Our Company recognizes stock ownership as an incentive for directors and named executives, reporting annually on utilization. We ask our Company to track and disclose similar information and associate voting power for all U.S. employees using meaningful classifications.
Widespread employee ownership is correlated with better firm performance, fewer layoffs, better employee compensation and benefits, higher median household wealth, longer median job tenure, and reduced racial and gender wealth gaps.[7] Our Company should educate and promote ownership plans and progress towards an engaged employee ownership culture.[8]
Employee engagement and trust are crucial to success. Expanding the Committee’s perspective beyond executive compensation would give them “a better grasp on how human talent matters for the company’s business strategy and operations.”[9] Our Company could benefit shareholders and the economy by leading on this issue.
Increase Long-Term Shareholder Value
Vote to Create an Ownership Culture – Proposal [4*]
[This line and any below, except for footnotes, are not for publication.]
Number 4* to be assigned by FB
The graphic included above is intended to be published with the rule 14a-8 proposal. It would be the same size as the largest management graphic (or highlighted management text) used in conjunction with a management proposal or opposition to a Rule 14a-8 shareholder proposal in the 2022 proxy.
The proponent is willing to discuss mutual elimination of both shareholder graphic and any management graphic in the proxy in regard to this specific proposal.
[1] https://inequality.org/facts/wealth-inequality/
[2] https://www.pewresearch.org/fact-tank/2020/02/07/6-facts-about-economic-inequality-in-the-u-s/
[3] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2649215
[4] https://thehill.com/blogs/congress-blog/politics/512413-employee-ownership-the-wealth-gap-and-the-current-crisis
[5] https://ownershipamerica.org/the-problem/
[6] https://smlr.rutgers.edu/sites/default/files/Documents/Centers/Institute_Employee_Ownership/rutgerskelloggreport_april2019.pdf
[7] https://secureservercdn.net/192.169.220.85/11l.986.myftpupload.com/wp-content/uploads/2021/10/WhitePaper-TurningEmployeesIntoOwners.pdf and https://www.nceo.org/article/research-employee-ownership
[8] https://smlr.rutgers.edu/faculty-research-engagement/institute-study-employee-ownership-and-profit-sharing
[9] https://www.edelman.com/trust/2021-trust-barometer/belief-driven-employee/new-employee-employer-compact
Comments are closed.