| June 9
June 9 Mark Zuckerberg and other members of
Facebook Inc's board have been sued by a shareholder who
claimed a policy letting them annually award directors more than
$150 million of stock each if they choose is unreasonably
In a complaint filed on Friday night in Delaware Chancery
Court, Ernesto Espinoza said the board was "essentially free to
grant itself whatever amount of compensation it chooses" under
the social media company's 2012 equity incentive plan, which
also covers employees, officers and consultants.
He said the plan annually caps total awards at 25 million
shares and individual awards at 2.5 million, and in theory lets
the board annually award directors $156 million in stock each,
based on Friday's closing price of $62.50. The lawsuit does not
contend that such large sums will be awarded.
Espinoza also said last year's average $461,000 payout to
non-employee directors was too high, being 43 percent larger
than typical payouts at "peer" companies such as Amazon.com Inc
and Walt Disney Co that on average generated
twice as much revenue and three times more profit.
Facebook spokeswoman Genevieve Grdina said in an email: "The
lawsuit is without merit and we will defend ourselves
A spokeswoman for Robbins Arroyo, a law firm representing
the plaintiff, had no immediate comment.
The lawsuit alleges breach of fiduciary duty, waste of
corporate assets and unjust enrichment.
It seeks to force directors to repay Facebook for alleged
damages sustained by the Menlo Park, California-based company,
and to impose "meaningful limits" subject to shareholder
approval about how much stock the board can award itself.
Among the other defendants is Facebook Chief Operating
Officer Sheryl Sandberg, a director whose compensation was
$16.15 million in 2013, according to a regulatory filing. She is
worth $999 million, Forbes magazine said on Monday.
Zuckerberg made $653,165 last year, a regulatory filing
shows, and Forbes said his net worth is $27.7 billion.
Espinoza was also a plaintiff in a 2010 shareholder case in
Delaware against Hewlett-Packard Co concerning its
handling of the resignation of Chief Executive Mark Hurd over
his relationship with a former contractor.
The case is Espinoza v. Zuckerberg et al, Delaware Chancery
Court, No. 9745.
(Reporting by Jonathan Stempel in New York; Additional
reporting by Tom Hals in Wilmington, Delaware; Editing by Tom