(Bloomberg) — Facebook Inc., the social-networking company planning an initial public offering, faces corporate-governance scrutiny from one of its investors, the California State Teachers’ Retirement System.
“We are in fact in the beginning stages of engagement with Facebook” over governance issues, Ricardo Duran, a spokesman for the pension fund, said in an interview. “We are planning to send them a letter.”
Facebook Chief Executive Officer Mark Zuckerberg controls 56.9 percent of 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, the second-largest U.S. pension, 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 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, Duran said.
Zuckerberg owns 28.4 percent 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. He owns an “irrevocable proxy” over those shares, Facebook said.
Jonathan Thaw, a spokesman for Menlo Park, California-based Facebook, declined to comment.
Reuters reported earlier that Calstrs has approached Facebook about governance.