Sustainable Finance Newsletter: Meta's $18 billion lesson on ignoring shareholders: Ross Kerber

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02/09/2026 12:00

By Ross Kerber
Sept 2 (Reuters) - The opinions expressed in this column are those of the author, a correspondent for Reuters.
     
If Washington sidelines shareholder activists, we'll miss them when they're gone.
On August 28, U.S. securities regulators took a step to diminish the power of investors who file resolutions at corporate annual meetings, aiming to move oversight to states.
The official notice came just days after Meta Platforms META.O agreed to pay up to $18 billion to resolve children's safety concerns. Activists from across the political spectrum say the deal vindicates their years-long efforts to make safety an issue at the company's annual meetings and say regulators should keep the status quo.
"Shareholder resolutions have a history of being an early-warning system, and Meta's the perfect example of that," said Michael Passoff, the founder and CEO of activist shareholder group Proxy Impact.
He said the case showed opportunities the company missed that could have saved it the money, had Meta founder and CEO Mark Zuckerberg only listened to critics rather than relying on his controlling stake to ignore their input.
With the payout, Meta will resolve claims that its products are designed to keep young users hooked while it misled the public and violated state consumer protection laws. The company did not admit wrongdoing as part of the agreement, which came as the legal tides were turning against the parent company of Facebook, Instagram, Threads and WhatsApp.
Meta agreed to restrict teenagers' use of Facebook and Instagram and to disable push notifications during school hours. The settlement includes guaranteed payments of about $12.7 billion, with another $5 billion contingent on whether rivals Snap SNAP.N, ByteDance and Alphabet GOOGL.O impose similar protections for children on their own social media platforms.

        "These are significant, extensive changes that will impact millions of parents and teens," said a Meta spokesperson via e-mail, adding that teens move between dozens of apps a day and so  other companies would have to participate in any broader solution.

        "This is a societal problem that requires collective action and collaboration," said the Meta spokesperson. They did not address questions about the role of shareholder resolutions.
BALANCING ACT
Meta's saga captures a running debate over how to balance power between corporate America's managers and investors. The arguments are playing out at the Republican-dominated U.S. Securities and Exchange Commission where Chairman Paul Atkins wants to get the agency out of the shareholder-resolutions business and to move oversight to state regulators. His preferences would help corporate executives resist shareholder-driven ideas.
An SEC spokesman did not address questions about Meta and did not make Atkins available to comment for this article.
A facet of the debate is the rise of unequal voting rights. In its recent IPO, for instance, SpaceX SPCX.O combined supervoting shares, stricter rules on shareholder proposals and Texas corporate law to give extra control to CEO Elon Musk and other insiders. The structure could set the tone for other AI-oriented IPOs expected soon.
At Meta, unequal share rights give Zuckerberg 61% of the company's voting power as of April 1, a disclosure shows, even as Meta declares as its mission to "Build the future of human connection and the technology that makes it possible."
To his critics, Zuckerberg's control means he can pay less attention to safety concerns. Some came up tied to the encrypted messaging services Meta added to its social media platforms that made it harder to police explicit photos despite internal warnings.
Investors worried too. One of Passoff's resolutions at Meta's 2020 annual meeting called on the company to report on the "risk of increased sexual exploitation of children."
Officially it won only 12.6% of votes cast. But excluding the votes of Zuckerberg and other insiders, that resolution won 43% of independent votes, by Passoff's calculations.
Similar measures in 2021 and 2022 did better and won majorities of the independent votes cast, he said. From 2023 to 2025, he asked Meta to publish "quantitative metrics appropriate to assessing whether Meta has improved its performance globally regarding child safety impacts and actual harm reduction to children on its platforms." They received a similar range of backing.
Proxy adviser Institutional Shareholder Services backed Proxy Impact's measures every year until 2025, when it said Meta had finally "made strides in addressing child safety on its platforms," according to its report.
There's no way to be sure that earlier action would have spared Meta the $18 billion. But I note statements like this one from Indiana Attorney General Todd Rokita who said Meta put profits over children's mental health "for years."
Not all shareholder resolutions shed new light on company operations, and many fare poorly on ballots. But even though most are non-binding, the measures often lead to changes with as little as 30% support because corporate directors do not want to appear unresponsive and be voted out.
Passoff cited the case of a 2019 resolution his group helped file at Verizon VZ.N that won support from 34% of votes cast, calling for the telecom giant to report on the risks of sexual exploitation of children such as via the Tumblr blogging website it once owned.
According to Passoff and to Tracey Rembert, another shareholder activist involved in the matter, Verizon later agreed to do a review and to create a safety team. It also produced a Child Rights Impact Assessment document meant to "inform and support company efforts to identify and address risks to child rights and safety across its business operations."
"Raising issues via a proxy vote has always been a good way to motivate reluctant companies to take that extra step needed to address an issue. None of these companies would likely have acted if there was no resolution process," Passoff told me in a follow-up email.

     A Verizon representative declined to comment.

 (Reporting by Ross Kerber; Editing by David Gregorio)
 ((ross.kerber@thomsonreuters.com; (617) 412 0093;))