Christopher J. Ailman, CIO of the California State Teachers' Retirement System, is deleting his personal Facebook account, and the $224.4 billion pension fund is also preparing a letter to the company on its governance practices, he said in an email.
CalSTRS will be writing to Facebook because the company's "governance is terrible," Mr. Ailman said in the email.
"We are currently establishing contact with Facebook to learn more about what controls are in place today to protect users' data into the future," said Aeisha Mastagni, portfolio manager in the CalSTRS' corporate governance unit, in a written statement Thursday. "Additionally, we would like to understand what additional steps Facebook is taking to protect this data in order to regain the trust of their users, the public, and their shareholders."
Mr. Ailman announced his decision to deactivate his Facebook account in a tweet on Wednesday.
"Their lack of oversight and poor management is offensive. #DeleteFacebook," Mr. Ailman said in the tweet.
As of Dec. 31, CalSTRS' holdings in Facebook were valued at more than $931.2 million. CalSTRS had $181.3 billion invested in equities as of Jan. 31.
CalSTRS is not the only asset owner with concerns over Facebook's governance. The Oregon Investment Council, Tigard, which runs the $74.9 billion Oregon Public Employees Retirement Fund, will be "looking carefully at potential shareholder resolutions (at Facebook) this year," said spokesman James Sinks in an email.
Oregon had $88 million in Facebook shares as of Dec. 31.
"We have voted and engaged with Facebook in the past due to governance-related concerns," Mr. Sinks said. "For Oregon trust funds, governance has always been an issue at Facebook."
Mark Zuckerberg, the company's co-founder, chairman and CEO, "owns approximately 14% of the economic value of the company and yet controls over 52% of the vote," Mr. Sinks said. "He also holds an `irrevocable proxy' over additional shares that increases his voting control to almost 60%."
CalSTRS also previously has raised governance issues with Facebook Inc.
Anne Sheehan, CalSTRS former director of corporate governance, wrote Facebook in February 2012 ahead of its initial public offering. CalSTRS objected to Facebook's all-male board and its relatively small size compared to other companies of its expected market capitalization.
Ms. Sheehan also noted that Facebook was to be a "controlled company," in which the public stockholders will have little influence.
Facebook subsequently added Chief Operating Officer Sheryl Sandberg and Gates Foundation CEO Susan Desmond-Hellman to its board.
In a June statement following Ms. Sandberg's board appointment, CalSTRS asked Facebook to phase in additional changes "as it matures in the public markets." These changes were continuing to diversify its board, equalize the voting power of shares to be representative of economic interest and separate the roles of chief executive officer and chairman of the board.
"Given the nature of this ongoing engagement, CalSTRS looks forward to having a substantive dialogue with Facebook's leadership on this issue, as well as other governance matters, from our perspective as a large shareholder," Ms. Mastagni said in the statement.
