A Facebook shareholder named Ernesto Espinoza has sued Facebook CEO Mark Zuckerberg and a few other board members for awarding themselves unfairly high compensation. The lawsuit was filed with Delaware Chancery Court.
Facebook board members can set themselves the pay they want to receive with the maximum being 2.5 million shares and individual awards can be up to $2.5 million resulting in an annual compensation of up to $156 million in stock for each board member considering the closing stock value of $62.50 of each share on Friday, as per the current compensation program of the company.
The complaint said that the non-employee directors received an average of $461,000 in stock in 2013, which is almost 40 percent higher than what their counterparts in other companies get. Espinoza has also claimed that it is a waste of corporate assets.
“Moreover, the members of the board are free to continue to award themselves virtually any amount of compensation they choose into perpetuity,” the complaint read.
The complainant also disclosed that Peter Thiel, a board member, received stock worth $387,874 last year and he has assets valued at $2.6 billion.
Facebook spokesperson Genevieve Grdina said “The lawsuit is without merit and we will defend ourselves vigorously.”
The complaint also states that Sheryl Sandberg, Facebook COO and a board member received $16.1 million as total compensation in 2013 whom Forbes values at $999 million, while Zuckerberg was given $653,165 last year. Forbes values Zuckerberg at $27.7 billion.
The lawsuit requests the judge to repay the estimated damages and impose “meaningful restrictions” on how much the board can award itself and that it should be approved by the shareholders.
The spokesperson of the law firm Robbins Arroyo which mediates the suit declined to comment.