Mark Zuckerberg should quit as Facebook chairman, according to shareholder with a $1 billion stake

Reuters / Rick Wilking

He won't be stepping down.

Mark Zuckerberg should step down as Facebook's chairman, according to an official who oversees investments for New York City's pension funds, which hold an approximately $1 billion (£710 million) stake in Facebook.

Scott Stringer, New York City's comptroller, called for an overhaul of Facebook's board after the Cambridge Analytica scandal. He made the comments to CNBC and we first saw the news via The Financial Times.

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Stringer has called for an independent chairman to replace Zuckerberg, plus three new directors with experience in data and ethics to help police Facebook's efforts in privacy.

"It is the eighth-largest company in the world. They have 2 billion users. They are in uncharted waters and they have not comported themselves in a way that makes people feel good about Facebook and secure about their own data," Stringer said.

He said the scandal showed there was "a risk to our democracy."

Stringer said the funds wouldn't pull their money out of Facebook, but added, "we do have the right to ask these questions."

As chairman and CEO of Facebook, Zuckerberg wields an unusual amount of control over Facebook. He owns a controlling number of voting shares over the stock, which give other investors no real say over the company's governance. It's unlikely Zuckerberg will step away from either role anytime soon, but the Cambridge Analytica scandal is a good chance for activist investors to call for changes.

In an interview with Vox on Monday about Facebook's role in society, Zuckerberg said his personal control of the firm was actually good for users in the long-term. Emphasis ours:

We're continually thinking through this. As the internet gets to a broader scale and some of these services reach a bigger scale than anything has before, we're constantly confronted with new challenges. I try to judge our success not by, "Are there no problems that come up?" But, "When an issue comes up, can we deal with it responsively and make sure that we can address it so that those kinds of issues don't come up again in the future?"

You mentioned our governance. One of the things that I feel really lucky we have is this company structure where, at the end of the day, it's a controlled company. We are not at the whims of short-term shareholders. We can really design these products and decisions with what is going to be in the best interest of the community over time.

The data privacy scandal, where Cambridge Analytica scraped 50 million user profiles without their explicit permission, has wiped around $86 billion off Facebook's market cap since the news broke in March.