Shareholders slam Facebook over 'incongruent' PAC contributions on gay rights, online piracy

Contributions have gone to politicians who have opposed gay rights issues, shareholders say

Facebook shareholders are taking the company to task for political contributions to politicians whose positions on issues such as gay rights and online piracy counter Facebook's.

The contributions do not agree with Facebook's public statements on issues including the Stop Online Piracy Act, the Protect IP Act, and lesbian, gay, bisexual and transgender (LGBT) rights, according to a document filed Tuesday with the U.S. Securities and Exchange Commission by shareholder NorthStar Asset Management, which represents more than 55,000 Facebook shares.

"Facebook has made political contributions that support politicians whose voting records directly contrast the company's stated public policy priorities, and may undermine the company's business model," the filing said.

Facebook's political action committee has contributed to three sponsors of SOPA, which opponents claim has threatened free speech and innovation, as recently as last fall, even while Facebook CEO Mark Zuckerberg has spoken out against laws that would hurt the Internet, the filing said.

Facebook's PAC has designated more than US$80,000 to politicians who sponsored or co-sponsored SOPA and PIPA, according to public data compiled by NorthStar, obtained from the Federal Election Commission's site.

When it comes to LGBT rights, more than 40 percent of Facebook's PAC contributions, totaling roughly $156,000, have gone to politicians voting against LGBT rights since 2012, according to NorthStar.

In a move to acknowledge social issues around gender identity, Facebook recently expanded its site to give users more ways to identify themselves, such as "trans" or "genderqueer."

NorthStar is calling on Facebook to adopt a political giving policy to ensure that its donations are in line with the values that the company stands for and provide an explanation for donations that are misaligned, NorthStar CEO Julie Goodridge said in an interview.

The proposal is up for a vote at Facebook's second annual stockholder meeting May 22, according to a separate proxy statement filed March 31.

A Facebook spokeswoman declined to comment. In the proxy statement, however, Facebook recommends that its stockholders vote against NorthStar's proposal.

"We have practices in place to ensure the appropriate disclosure and oversight of our lobbying and political activities," Facebook said in the statement. The proposal seeks to impose requirements that would be cumbersome to apply, are not required by law and are not standard amongst other companies, including competitors, Facebook said.

NorthStar previously tried to get Google to make a similar change, but got nowhere with it, Goodridge said. Intel, however, adopted a similar proposal last year to create a "congruency report" around financial donations.

NorthStar's concerns come as another major software company, Mozilla, has been forced to grapple with issues around gay rights. Recently appointed Mozilla CEO Brendan Eich resigned last week due to controversy over his support of California's anti-gay marriage law in 2008.

Facebook shareholders also noted in the filing that the company's PAC contributions have gone to politicians voting to deregulate greenhouse gases and who have voted against the American Clean Energy and Security Act of 2009.

In sum, shareholders feel that "the consequences of unintended incongruent contributions include alienation of customer base, alienation of advertisers, harm to company name, and potential harm to shareholder value," Tuesday's filing said.

Facebook's contributions, the shareholders claim, undermine the company's business interests and public policy stances, thus putting shareholder value at risk.

Zach Miners covers social networking, search and general technology news for IDG News Service. Follow Zach on Twitter at @zachminers. Zach's e-mail address is zach_miners@idg.com

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