Facebook Inc., the social-networking company planning an IPO, faces scrutiny about its corporate governance from one of its investors, CalSTRS.
“We are in fact in the beginning stages of engagement with Facebook” over governance issues, Ricardo Duran, a spokesman for the $144.8 billion California State Teachers’ Retirement System, West Sacramento, said in an interview. “We are planning to send them a letter.”
Facebook CEO Mark Zuckerberg controls 56.9% of the voting power at the social network, which filed last week to raise $5 billion in an IPO. Corporate governance experts have said that the CEO’s majority control puts too much power in the hands of one person.
CalSTRS has a history of pushing for changes at companies. It lobbied last year to get corporations to disclose their political donations. In 2009, the pension fund sent a letter to 300 of its largest portfolio companies asking them to let shareholders have an advisory vote on executive compensation.
CalSTRS is an investor in Facebook through two of its private equity managers, Mr. Duran said.
Mr. Zuckerberg owns 28.4% of Facebook, the largest single stake in the company, and he extended his voting power by implementing a dual-class stock structure in 2009. Some of his shares have 10 times more voting power than common stock, according to Facebook’s IPO filing. The CEO also gained voting power through agreements with individual stockholders. Mr. Zuckerberg owns an “irrevocable proxy” over those shares, Facebook said.
Jonathan Thaw, a spokesman for Menlo Park, Calif.-based Facebook, declined to comment.