(Updates with Facebook comment in fifth paragraph.)
June 9 (Bloomberg) -- Facebook Inc. and Chairman Mark Zuckerberg’s program of letting company directors set their own pay, capped at stock currently worth $145 million per person, wastes corporate assets, an investor said in a lawsuit.
Facebook’s board paid non-employee directors an average of $461,000 last year in stock, exceeding industry peers by as much as 43 percent, shareholder Ernesto Espinoza said in a lawsuit filed in Delaware Chancery Court.
“Moreover, the members of the board are free to continue to award themselves virtually any amount of compensation they choose into perpetuity,” according to the complaint made public today in Wilmington.
The current compensation program sets the individual yearly limit on directors’ pay to 2.5 million shares. Facebook has been trading around $63 per share on the New York Stock Exchange today.
Peter Thiel, whose net worth is $2.6 billion according to the Bloomberg Billionaire Index, received $387,874 in stock awards last year for being on Facebook’s board, according to the complaint. Sheryl Sandberg, Facebook’s chief operating officer and a member of the board, received $16.1 million in total compensation, including $15 million in stock awards, last year, according to the suit.
“The lawsuit is without merit and we will defend ourselves vigorously,” said Facebook spokeswoman Genevieve Grdina in an e-mailed statement.
Espinoza alleged breach of fiduciary duties, waste of corporate assets and unjust enrichment. He asked a judge to “recoup the unfair excessive compensation” on behalf of the Menlo Park, California-based company and “impose meaningful restrictions on the board’s ability” to grant the awards.
The case is Espinoza v. Zuckerberg, CA9745, Delaware Chancery Court (Wilmington).
--With assistance from Dawn McCarty in Wilmington.