Good morning. Good morning and welcome and thanks for joining us for Facebook's Annual Meeting of Stockholders. I'm Colin Stretch, General Counsel of Facebook and Secretary of this Annual Meeting, which I now call to order. Let me run through today's agenda. We will first focus on the formal business set forth in our proxy statement.
Mark will then spend a few minutes talking about how Facebook is doing and then we will have a general Q and A session. Before we begin with the formal business, I'd like to remind you to please turn off all mobile with Vices and the list of rules of conduct for the annual meeting that you all provided when you entered the room. To conduct an orderly meeting, we ask that participants abide by these rules, including the prohibition on recording audio or video. Thank you for your cooperation in advance. Now let me start by introducing the members of our Board of Directors who are here today, Mark Zuckerberg, Sheryl Sandberg, Erskine Bowles and Sue Desmond Hellman.
I'd also like to introduce a few more people who are in attendance. Alex Bender of Ernst and Young LLP, our independent registered public accounting firm is present and also present is Chris Vico, who has been appointed by the Board to act as the Inspector of Election for this meeting and will tabulate the results of the voting. Ms. Vico has executed the oath of Inspector of Election. Turning now to the formal business of the meeting.
I will first report on the notice of this meeting. I have a copy of the notice of the meeting together with a declaration as to the mailing and the proxy statement made available to all Facebook stockholders of record determined as of the close of business April 13, 2015. I have a list of the stockholders either to vote at this meeting, which is available for inspection by any stockholder present or by any proxy holder representing a stockholder and wish list will be filed with the records of this meeting. I'm advised by the Inspector of Election that the holders of shares representing at least a majority of the voting power of Facebook Entitled to vote are present or represented by proxy here today and a quorum is therefore present. This meeting is therefore authorized to transact business.
We have 6 proposals to consider at the meeting, each of which is described in the proxy statement. We will discuss these proposals momentarily. First, however, I remind you that the voting today is by proxy and written ballot. If you've already sent in a proxy and do not intend to change your vote, there is no need for you to cast a ballot today. Any stopholder present Who has not returned to proxy or who wishes to change your vote should cast a vote here at this meeting.
So does any stockholder wish to cast a ballot today that has not already done so? If you do, please raise your hand for a ballot and one of our volunteers We'll bring a ballot to you. And just keep your hand up until one of our volunteers gets to you. It's now 11:0:3 and we will now open the polls for voting. You may vote at any time during the ensuing discussion of the proposals on the agenda.
To vote, please mark and sign your ballot accordingly. And then once you are done with voting, raise your hand again and one of our volunteers will come to you to collect your ballot. Yes, no rush. Just again keep your hand up if you need a ballot. So I will now review the proposals to be voted on by the stockholders at this meeting and then we will take questions specifically on the proposals when I'm completed with my summary.
The first item of business is to elect our Board of Directors to serve until the next annual meeting or until the earlier of their death, resignation or removal. The Director nominees are Marc Andreessen, Erskine Bowles, Susan Desmond Hellman, Reed Hastings, Jan Koum, Sheryl Sandberg, Peter Thiel, and Mark Zuckerberg. The qualifications of each proposed director is set forth in the proxy statement and no other director nominees have been properly submitted for election pursuant to our bylaws or SEC rules. Therefore, no other nominations for the Board may be The Board of Directors recommends a vote for the 11 of each of the nominated directors. Proposal number 2, the second item of business is to ratify the appointment of Ernst and Young LLP as our independent registered public accounting firm for the year ending December 31, 2015.
The Board of Directors recommends a vote for the ratification of the appointment of for Ernst and Young LLP. Proposal number 3, the 3rd item of business is to re approve 162 ms limit of our 2012 Equity Incentive Plan under the Internal Revenue Code to preserve our ability to receive Certain corporate income tax deductions that may become available to us in the future. The Board of Directors recommend to vote for reapproval of such 162M limits. Finally, we have received 3 stockholder proposals that complied with the requirements of our bylaws and SEC rules and are therefore eligible to be voted on at this meeting. Proposal number 4 requests a change in stockholder voting.
Proposal number 5 is a proposal regarding an annual sustainability report and proposal number 6 is a proposal regarding a human rights risk assessment. With respect to these 3 stockholder proposals, the proposals themselves, supporting statements and the company's opposition statements are set forth in the proxy The Board of Directors as reflected in the proxy statement recommends a vote against each of the stockholder proposals. The applicable proponent of each of the stockholder proposals may now make a statement in support of their respective proposals. I will call you up 1 by 1 to the microphone. I would ask that you please limit your statement in support of your proposal to 3 minutes.
And once we've gone through all three of them, we'll have a short Q and A section on the formal business of the meeting on these proposals that we are considering. So first with respect to proposal number 4, Ms. Christine Jantz representing Northstar Asset Management Funded Pension Plan. Ms. Jantz, thank you.
Good morning. My name
is Christine Jansz from Northstar Asset Management in Boston, the beneficial owner of over $4,000,000 of Facebook common stock. I'm here to represent Resolution 4, a good governance proposal, which would give each share an equal vote and would allow representative shareholder votes. As shareholders know, Facebook has 2 classes of stock, Class A with 1 vote per share and Class B with an overwhelming 10 votes per share, Which is closely held by management insiders. This discrepancy gives the majority a super majority of control to insiders, Essentially making it impossible for stockholders to weigh in. Yet the concern we raise here is not just about fairness.
We are also concerned that insiders and management seek to insulate the governance of the firm from shareholder oversight. Studies have shown that excessive voting control given to insiders rather than enhancing performance leads to poor performance over the long run. In fact, a study has reported that the more control that insiders have, the more they can pursue strategies that are at the expense of outside shareholders. In fact, studies have shown that on the average and over time, companies with multi class capital structures underperform those with a one share, one vote And as others point out, With few constraints placed upon them, managers holding superclass stock can spin out of control. Families and senior managers can entrench themselves into the operations The company regardless of their abilities and performance.
Finally, dual class structures may allow management to make bad decisions with few consequences. Given that part of our company's mission is to make the world more open, limiting substantial shareholder input is wildly counterintuitive. We feel that shareholder value is best derived when insider voting control of the firm is separated from insider economic ownership. Economic ownership provides enough of a reward for management when stock prices rise. The current dual class structure eliminates shareholder checks and balances over management decisions.
Without a tally of 1 vote per share, claiming that stockholders rejected or accepted a proposal may mean little more than Mr. Zuckerberg Voted against it. We are very concerned that over the long term, the use of insider control at Facebook will inhibit shareholders from weighing in on company governance and policy issues with detrimental effect on shareholder value for the long term. We urge you to vote for proxy item number 4.
Thank you, Ms. Jens. Next with respect to proposal number 5, Sister Judy Byron, who's representing today the Comptroller of the State of New York. Mr. Byron, thank you.
Mr. Zuckerberg, shareholders, I'm here today on behalf of the New York State Common Retirement Fund to introduce the Fund's resolution calling on Facebook to issue annual sustainability report describing the company's environmental, social and governance policies and practices. Environmental, social and governance issues can pose significant risks to businesses and without proper disclosure, Shareholders and analysts cannot determine whether the company is managing these risks properly. The majority of Fortune 500 And S and P 500 Companies already recognize the value of sustainability reporting by regularly issuing such reports. We believe that Facebook should join that number.
And therefore, on behalf of the New York State Common Retirement Fund, holders of 6,097,006
Now with respect to proposal number 6, again Sister Judy Byron now representing the Sisters of the Holy Names of Jesus and Mary. Mr. Byron?
Our commitment to children's rights and welfare along with Our fiduciary responsibility as investors motivated us to file this proposal, which seeks to ensure Facebook's We were pleased to dialogue with our company's management in December, But we're disappointed that Facebook failed to answer multiple questions we raised. We remain unconvinced that the company is adequately addressing risks from How Facebook uses young people's data for commercial purposes and the kinds of marketing to which young people are subject on the Children's right to privacy is memorialized in the UN Convention on the Rights of the Child And the Danish Institute and UNICEF have recently emphasized the importance of marketing and advertising that respects and supports children's rights in their guidance for how companies should assess their impacts on children's rights. Facebook says that its statement of rights and responsibilities and data policies contains strong protections against the Disclosure of our users' personal information. But the so called aggregate de identified data that our company does provide through collaborations with major Advertisers, data brokers, developers and mobile services is extraordinarily revealing and allows advertisers to engage in highly targeted Nowhere does the company state if there are special rules governing the sharing of such data about users who are minors.
Further, Facebook states that its advisory policy helps foster a safe environment to connect and share, but the only limits on ads to minors Include a few adult products and the Board does not include any organization that has expertise on the impacts of marketing on children and youth. We are concerned that Facebook is not committed to protect young consumers from threats to privacy involving commercial use of personal information or From harmful advertising given the increasing reliance on users' data by marketers, the intensive use of social media by young people And you've heightened its susceptibility to marketing messages. Therefore, we urge shareholders to vote yes on this proposal and we reiterate our request of company management to continue this conversation with concerned investors. Thank you.
Thank you, sisters and thank you for all the statements. We will not provide responses to these statements as the responses of the company have already been set forth in the proxy statement. I will however now open up the floor for questions specifically on the proposals. We'll have a general Q and A session later, but if you have any questions Specifically related to the proposals being considered, encourage you to line up at the microphone. If you have a question but can't get to a microphone, please raise your hand and one of our volunteers will bring one to you.
And as stated in the rules of conduct, ACH holders should not address the meeting until recognized. And after being recognized, please identify yourself, identify the proposal your question is directed to, And then ask your question. Finally, please limit your question to 1 minute so that we can preserve time for the general Q and A later. Sir?
My name is Sheldon Ehrlich. I'm a shareholder. I'd like to address the last two proposals. First, the one from the Controller of the State of New York. Now remember that the Controller of the State of New York pretends to represent the hundreds of thousands of workers Employed by the government of the state.
He does not. Those workers may have different opinions. And remember that a recent controller in the State of New York was convicted of crimes and sent to prison. On the proposal by the sisters. They don't want you to allow McDonald's to ask the kids to have a burger and fries.
Vote no on both these proposals.
Thank you, sir. Any other questions or statements in connection with the proposals being considered? We have a hand there. Can someone do you want to make it to a microphone or do you want to
My name is Carol Ruth Silver and I speak in favor of the 2 proposals, number 56 that were represented by Sister Byron. I think that Facebook, although it has not adopted a mission statement like Google to do no harm, It's believed by those of us who use the platform, those of us who believe in the company That it is trying to do no harm. And it's very, very clear from reading the local newspapers, The Wall Street Journal, The New York Times that American companies are doing great harm in the 3rd world by permitting the kind I think that Facebook should look at And should respond to in a more reasoned way the proposals and that shareholders, I hope, We'll vote in substantial numbers to support them.
Thank you. I do want to make sure The audience is aware that the proxy statement does include fairly comprehensive responses to the proposals that are for you. With respect to those last two proposals, I hasten to add that we agree with the importance certainly of human rights and how that connects to our mission. We certainly agree with providing A product that is safe for all our users, including younger users. The question is how best to serve those interests.
And as reflected in the proxy statement, we feel like we have A strong game plan in place with respect to both Mephi proposals themselves would not further those interests. Are there any other questions on the proposals themselves? We will now collect any remaining ballots. Please raise your ballots and our volunteers will come around to collect them. Anyone else?
1 more, 2 more. Okay. All votes have been cast on the proposals to be considered at this meeting and as of elevennineteen, the polls are So I will now confer with the Inspector of Election and shortly will report on the preliminary results of the voting. Results. So the vote required to approve Proposal 1, the election of directors, as a plurality of the voting power present in person or represented by proxy at the meeting.
Based on results as tabulated by the Inspector of Election, each of the 8 nominees on the ballot received the highest number of affirmative votes cast and therefore each the nominee has been elected to the Board of Directors. The vote required to approve proposals 2 through 6 is a majority of the voting power Present in person or represented by proxy. Based on results as tabulated by the Inspector of Election, the proposal to ratify the appointment of Ernst and Young LLP, key Proposal 2, and the proposal to re approve Section 162 limits of our 2012 Equity Incentives Plan under the Internal Revenue Code Proposal 3 have been approved by at least the requisite majority of the votes cast. And each of the stockholder proposals, proposals 4 through 6 have been rejected by at least There are no other formal items of business before the meeting. Final results will be recorded as stated in the minutes of this meeting and filed with the SEC on a Form 8 ks within 4 business days.
This concludes the formal part of our meeting and the annual meeting is now adjourned. Now before I ask Mark to come up on the stage to share some thoughts on the I want to remind you that Mark's remarks and the Q and A that follow may contain forward looking statements regarding future events and the future financial performance of the company. We We caution you to consider the important risk factors that could cause actual results to differ materially from those in the forward looking statements in the presentation and the Q and A to follow. These risk factors are more fully detailed under the caption Risk Factors in our quarterly report on Form 10 Q filed with the SEC on April 23, 2015. In addition, please note that the date of this annual meeting is June 11, 2015 and any forward looking statements that we make today are based on assumptions as of this date.
We undertake no obligation to update these statements as a result of new information or future events. Mark, do you?
I I want to start off by just thanking all you guys for coming out today and for holding our stock and for believing in us. At Facebook, we believe that this mission that we're on to help make the world more open and connected is a really important and meaningful thing for lots of around the world. And your confidence in our team and our company in achieving that and the In terms of this mission, right, we think that this is more important than ever today to help connect People around the world. In a lot of ways, the world remains very divided and is more divided than ever. But services that can help people communicate and stay in touch, can help families be reunited and Help people stay in touch when they're far away from each other.
Help businesses, small businesses and large amounts of commerce to be able to happen. It enables people to get connected to people who'd be new customers for them and able to create new things and grow jobs in the economy. And it shapes how we communicate with our leaders in society and hopefully that helps to shape the world for the better as well. So we believe very deeply in this mission and what we're doing. And we're really proud of the results over the last year in 2014 and the momentum that we have for being able to deliver more results going forward.
And when I think about The parts of our strategy and what we're trying to do over the next decade, we kind of divide it up into 3 basic Timeframes. Over the next few years, there are some things that we're doing. We have this big set of products today, more than 1,400,000,000 people use the Facebook website and app every month And a lot more people we think would benefit from using that and we're working on trying to make that a better experience and trying to grow that And that's a really big focus that we have and I'm happy to talk about that today. Over the next 3 to 5 years, One of the big parts of our story is going to be that Facebook now is no longer just a single app and way that people communicate. But now we've developed a strategy of trying to build multiple world class apps and services for all the different ways that people Right.
So we acquired this company WhatsApp where now 800,000,000 people use that to Send messages every month across the world. We built this product Messenger that more than 700,000,000 people are using to communicate. We have a Groups product that more than 700,000,000 people monthly are using to communicate in small groups and share on topics about their interests. And we have communities like Instagram that more than 300,000,000 people are using to share things also about their with broader groups, often more publicly. So what you're seeing is that there are all these different kinds of products and we're focused on building world class tools in each These different categories, whether it's private communication or sharing with interest based communities or sharing publicly that expand on this mission and give people more ability to share what's important to them.
So over the next 3 or 5 years, a big part of what we do is going to be continuing to grow those communities, while also starting to evolve those products to become important drivers of revenue and our overall business as well. And that an important and fun part of what we get to do over the next 5 years. Over 10 years, We look to figure out what are the big changes in the world that we need to help drive in order to really deliver on So we talk about things like Internet.org, right, which is this effort to help spread Internet access around the world, right? Because in order for people to be able to communicate and stay in touch with people and enjoy all the economic benefits That the Internet brings, everyone has to be on the Internet. And that's not the case today.
Actually, today, only a little more than a third of the world's Population has Internet access. So we're working on a long term project to be able to drive more Internet access that more people can share in those benefits. And We're proud that today, I think it's more than 9,000,000 people already have Internet access You didn't before because of our efforts with Internet.org. So it's still early on in terms of what we're doing there, but that's going to be an increasingly Important thing that we're doing to drive this mission of helping everyone around the world be able to stay connected. There are other things that we're doing over the long term as well.
We're trying to build future platforms for how people will connect and communicate. So whether that's building virtual reality and augmented reality, so that way just like there were Computers and now people primarily use mobile phones as their way of communicating and using apps. In the future, we think that there will be So you can kind of look at these different parts of our strategy, 3 years Taking this community around sharing in Facebook and News Feed and continuing to grow that and the business around it, 3 to 5 years, taking these new products that we've either built or acquired into our family and continuing to grow those parts of the community and turn them into major The ability to deliver this mission for everyone in the world. So we're really excited. We have a lot of fun stuff going on that I think is going to drive a lot of value for the world broadly in delivering this mission and for our shareholders.
And I thank you guys for all of your support along the way.
So I'd like to invite Sheryl Sandberg, our COO Dave Wehner, our CFO and Joel Kaplan, our Vice President of Global Public Policy to join Mark on the stage. And we'll now open it up for general Q and A. You can see pieces of tape behind each of the microphones. So please line up behind the tape. And I'd like to ask Reverend Jackson to honor us with the first question.
Reverend Jackson?
Thank you very much. I would like to discuss the issues A moment of justice and inclusion, but before I drive a lot, take a special liberty for Arthur Quandollos as a consolation to Cheryl. I would like to say that Cheryl, In 1970, Doctor. King was killed in 1968. His father said to me That I thought Martin would survive after he survived Mississippi in Chicago, but then he was killed suddenly.
All of you left and went back home. I used to go to the graveyard alone and talk with him every day. I think he was talking back to me. I focused so much on him until I forgot I had some others at And so my son was killed in the swimming pool once Sunday morning. Before I adjust to that, my wife was shot and killed while I was In church, when she was playing the organ.
My message was that I lost A lot in mind, but I have a lot left I have forgotten. You've lost a lot. We should have a lot left. For those who know the words of privilege, you would join hands and bow hands in prayer. I might make that appeal.
We're taught in all of our ways to acknowledge God that we may be alone that God As promised, we never leave us alone. We ask God to be with Sheryl and her children in a special way, The mystery of death came suddenly, eclipsed the sun, but behind the darkness the sun never stops shining. She has lost a lot, but has a lot left. Precious memories, 2 darling children, a legacy. And they will live as long as we remember him and we will never forget.
Amen. Thank you. Thank you for the opportunity to present to you today. This past year, Rainbow Push launched a campaign to disrupt the tech industry. The difference a year makes over 25 companies released their data diversity data in front of what I call its 2% problem.
Today, Diversity and inclusion, income and equality are at the forefront of the industry's agenda. Women and people of color represent an underserved market, underutilized talent and untapped capital. The Versed and Inclusion will drive innovation in this next era and Facebook and the tech industry will do well to embrace, engage and empower this space in innovation. Our brand leaders across the industry who will disrupt the industry with a vision, commitment and We're encouraged to have ushered in a new era of diversity and inclusion. Facebook is a young company, but not too young to step up and lead this new era.
Despite your best efforts, the representation of African Americans and Latinos remain basically static. Too Put your mind to it, you can certainly build a pipeline to engage women, African Americans and Latinos and people of color to change the face of technology. The good news is that Facebook set policies to pay minimum wage of $15 an hour, negotiating union contract Tim Cook said this week, diversity and inclusion are solvable. The tech industry has shown that can solve the most challenging complex I want to pose a few questions, Mark, if I might. Where are we a year later?
Will Facebook release your EEO-one report and diversity data this year? What progress have you made in closing the risk gap? How many new employees has Facebook hired this year? How many and what percentage of the Black, Latino, Asian or women? Please put partnering with Rainbow Push.
We've given 1,000 churches across the country to put tech labs in their church to train our children apps and codes, Financial Literacy and the Stock Market Gain. We need your support. Don Graham is leaving your Board, having left your Board. Well, Facebook made commitment to replace him with an African American and a person of color. You agree to place a bylaw amendment that will For an explicit and active search for women, people of color for all future board openings, we will have people who are qualified Right now, I hope the board does not shrink.
But there are few people at the bottom of the color that white Comes like a snow capped mountain. We must make the Board look like America. Facebook considered tax reform to repatriate the over $2,000,000,000,000 in offshore profits to ReinvestIn and Rebuild America. Lasse, can you speak to Facebook's multicultural advertising marketing strategies And utilization of minority legal professional and financial services firms in your company. Thank you again for allowing me to share with you today.
Whether you agree with me or not like me, Jesse L. Jackson on Facebook.
Rev. Jackson, let me start by thanking you deeply for your personal And prayers. I know that I'm not the only person who stays grief. You shared your stories. I'm sure so many people here And elsewhere have faced this as well and your prayers bring us all together in hope and I know I'm grateful and I imagine everyone else here is.
So thank Yes, sweetly. So, Les, this is a topic that's very near and dear to our hearts on diversity. And We believe it's important not just because it's the right thing to do, although it is the right thing to do, but also because we believe we'll build a better, stronger, more successful company if we are represented by the people who represent our products. We're a very we have an unbelievably diverse consumer base, 1,400,000,000 people using our products around the world. And that means the way we're going to build the best product is by reflecting that type of diversity.
And we talk a lot about cognitive diversity, Diversity of thought. And the best way to get there is diversity of background. That means everything from gender to race, also global diversity for us. Most of our users are outside the United States. Historically, most of our employees, we have to really think about how we get to rep Global Impact represented.
And so we've taken this very seriously. We are going to release our numbers. We'll release them the same time we did last year, which towards the end of June. We have had a slightly more progress in actually recruiting people in this year, But they don't move the overall numbers as much as we would want and we know we have a long way to go. So the real question you have is what Are we doing to move those numbers?
And here's what we're doing. The first thing is we focus on our internal programs to make sure that we are a fair place to work. We treat everyone well. You mentioned what we did with our contractors and putting in a $15 minimum wage. We also put in a minimum of 15 Paid days off for sick or family leave or personal vacation as well as a $4,000 new child benefit So that anyone could take paid paternal and paid paternity or maternity leave.
We're very proud of that and we think that, That will be very helpful and we appreciate your support of that. We also look at the Facebook employee base. For many years, we've done Annual and biannual salary reviews to make sure that we're paying people fairly across things like race and gender. This past year, we went one step further And we put in place a very comprehensive management Managing Bias training program. A number of us worked on it.
I worked on it myself. Our Head of People at HR, Lori Goler is here, Maxine, we all worked on this ourselves and we've now put a good percentage of the company through it and it's pretty hard hitting training Where we talk about what are the biases, both the small things and the bad things. And now that I think about it, one of the slides has a quote from you in our training. You are part of that training session.
We also will I'm
sorry, not royalties. It's a public quote. We'll work it out. But it's a good quote and it's a hard hitting quote and voices like yours, we worked Experts on this training around people who could really help us make sure that we have the kind of environment people would raise issues. We're also working hard on the So we did a very big push with our recruiting organization.
The first step to hiring people is getting our recruiting organization And all of us to find those people. We know they're there. We're working with the historically backed colleges and the Hispanic serving institutions to find the candidates that we know are out there so that we get a chance to interview them and hopefully hire them. We're working on the pipeline. We have a Facebook internship program, which was for computer science.
We now started a business one and we went younger. We started freshman year Because that gives us that wasn't what we've done before. That gives us a chance to find women and people of diverse backgrounds who might not think they could go to a technology company or might not Thought of that, by senior year, people are a little bit on a career path, so we went younger to make a bigger investment in starting freshman year. And we went even further than that for our local community with Facebook Academy setting up an internship program for local high school students so they could get involved. We've also done a bunch of trying to increase diversity in computer science because that is so important to our industry and it's something you have spoken to so many customers on.
In partnership with the Lean In Foundation, LinkedIn and the Unita Borg Foundation, we've set up computer science and engineering circles on campuses. Men, women, anyone can join to try to get people interested in computer science to stay. Our goal is to have 100 of those circles and there are over 200 already and we just And one of those now has become the lean intern program. There's a college student At 85 companies that are leaning in together and we're supporting that. We also work with Grace Hopper and a bunch of other programs.
We
We know we're not where we need to be.
We know we need to change our numbers so that we can reflect the diversity of the population we serve And we are committed to all of these programs. A lot of this is new and doing even more going forward. We're also grateful for the opportunity to work with you and other grassroots
May I just say that it's not numbers for numbers' sake. I don't support getting more H-1B workers. We have workers Potentially in Oakland and San Jose and LA and Memphis and Chicago, we must train our own youth and even the playing field. Secondly, the Board does not look like Facebook's face and with the absence of Mr. Graham, here is an outstanding opportunity for you.
We'll issue to consider expand that Board because I think what's missing when I close, If a football player is a great, great, great, great quarterback and has all the skills, but only has one eye. On his best day, he misses half of the playing field. And so when you miss the playing field, you miss many opportunities to score and to survive. But what makes our football players great, The next team break is the plan for this evening. The rules are public, goal to clear referees are fair and the score is transparent.
I will appeal to you on your boards and on your C suites and then your investment. Please consider our appeal for a goal target time to plan for more inclusive as the key to growth. Thank you very much.
Thank you, Robin. So we will have a general Q and A session. We'll just alternate sides and we'll go till about 12:10. Good morning, Board of Directors. My name is Chris Ford, shareholder and most importantly an enthusiastic user of Facebook.
So thank you. My question this morning is with regards to the desirability of using Facebook. I'm curious to learn of what instruments or tests either internal or external that is not only reconfirming the Usability of Facebook, but also the desirability for end users. And this seems to be increasingly important in an increasingly populated field of social media options. Thank you.
Yes, I can speak to this. So
when you talk about Facebook, I think most people today still think about their experience of reading News Feed, right? That's 1,400,000,000 people every month open up the And their primary experience is seeing this kind of content. And We spend a lot of time optimizing that, right. The average person has 150 friends or more on Facebook And those people are sharing a bunch of content each day. And our job is to make sure that we can show you the most important things that you don't want to miss, Right.
So if your cousin has a baby, right, or someone posts something that's really important that's going on in the world, There might be hundreds of different posts that you could see that day. And one of the things that we just think is really critical to our job Is making sure that those most important things are shown really prominently at the top, right, and are surfaced. We know that we need to make sure But the service is really fast, right? If it takes 5 or 10 seconds to load the app, then that's a worse experience and people aren't going to want to use that So there are all these different metrics that we're tracking very closely in every change that we make from how quickly does the app load, how Can people navigate through it? How do people rank the content that we're showing?
Do people engage with it? Does it create more connection between people? Are Are they sending messages? Does the content that we're showing encourage people to interact more with their friends And so a big part of how we run the company is we empower all the engineers and product managers to try out new ideas to make this better. But then after each idea that we try out, We look very rigorously at how it affects each of those different things that we care about and then we just move forward with the ones that are really positive for the community.
I should have said at the outset, thank you for your question, sir. I should have said at the outset, we're going everyone to limit themselves to one question for 1 minute because we have so many of you here and we're grateful, but we'd like to get through as many questions as we can. Sir?
I'm Chad Rowe from Dallas. And at my age, it helps me to pick in analogies. And it seems to me People used to fight and dive to occupy real estate and there might be something now called digital real estate where Facebook has clearly taken the high ground. Is that fair to think of the face of your mobile app as a digital real estate store and that It's fair to defend. And then the other thing I had another part of the same question and analogy, Brian Nelson won 11 tournaments in 1945 or And then he quit because he said he had to try to try.
The fire is still burning here, is it not? That's for you,
sir. I
don't know
if I understood the second part of what you're asking.
Well, I mean, we've had so much success. Is The fire is still there. You have to try to try.
Yes. So, yes, you asked 2 different questions and I So for the first one around real estate, one of the things that we think about, this is connected to the first question Well, the better of a job we can do at showing people content that is important to them, Then they'll also engage more, right. So instead of maybe only reading through or looking at 20 stories, I'm just making these numbers up, this isn't actually how People look through, but maybe they'll look at 25 if we can do a better job of ranking and surfacing the important stuff across the network. I think the real numbers are closer to 100. But so as time goes on, I mean, when you're talking about real estate, It's the better of a job we can do at showing content, the more we earn that people are going to look Get more content in Facebook and those pieces of content, I think are the real estate that's important, because the more time and the more engagement that people are spending for the business.
Then they'll also see more ads and engage with those ads and will make money in addition to helping people connect more with their friends and know more about what's going on in the world. So as we improve the experience, we do increase the amount of real estate And that I think is aligned with this mission of connecting people around the world and in growing our business. For your second question About are we still excited to keep pushing hard? Yes, I think one of the things that's awesome about where we are now Is that we can take on much bigger projects, right. So instead of just growing one community, which is what Facebook and News Feed is today, We can grow multiple communities at the same time with all the lessons that we've learned from growing this first community over the past 10 years, Right.
So I mentioned this in my opening comments, but WhatsApp now has more than 800,000,000 people using it, right. When they joined us, they had a little more than 400,000,000. Messenger, we grew in house from nothing to now more than 700,000,000 people using Instagram joined us when I think they had 20,000,000 or 30,000,000 people and now more than 300,000,000 people using it. In groups, again, we've kind of grown from nothing to more than 700,000,000 people a month using it. And it's part of what allows us to do this as we've built up These lessons and base of experience from growing the core Facebook product that we can now take on multiple bigger projects the same time, I think those things will each also contribute to the mission of the company in helping people connect and share in different ways and also be big businesses and our revenue lines for our business in their own right over time.
So I'm really excited. This is a very exciting time. Being able to take on projects also likeinternet.org, not only to connect people who are already on the Internet, but to be able to grow the Internet and grow the Those are awesome things that you kind of just don't get to take on until You already have the space that you can build from and a lot of talented people at a company who can solve different So I would say that we're more motivated than ever to take on bigger problems for the world.
Excellent. Thank you.
Hi. My name is Charles Huang coming from New York City. Thanks again for hosting this meeting. So despite what the media says like my financial analysis shows that Facebook stock is still very undervalued. So my question revolves around what's the rationale For using Facebook stock for acquisitions versus using cash, which would be a lot cheaper for us.
So I can take that. We obviously value you being a shareholder and thank you. We believe we've got great opportunities to Continue to invest to grow this business going forward. And so we will continue to evaluate what forms We use to grow the business going forward. And the most important thing is that we believe we've got great opportunities to invest Across the different dimensions that Mark talked about.
So the near term continuing to grow the advertising business, we've got great opportunities to continue to make that around these next generation of services that Mark talked about. So I think the thing that we're most excited about is the opportunity to continue to And we'll obviously look at what forms of consideration we use for our acquisitions on an
But how do you decide when you use stock versus
Well, we'll look at it at that time based on an evaluation of what the acquisition As we look at the acquisitions we did last year for instance for WhatsApp, the size of that acquisition made it necessary that we would use a large stock component Just given our cash balances. So we look at it on the basis of what we think is the right and prudent strategy for the company, both financially and operationally.
Okay. Thank you.
Good morning. My name is Adam Golds, The shareholders are a very happy one at that since late 2012 when mobile ads started to appear in my feed. First, a few seconds, Cheryl, my family's thoughts and prayers are with you. I'll take And to Mark, what products and services are you not working on that you wish you can right now, given that you are having a position to do something no other company has done,
So I think it's a hard question to answer because the things we're not working on are things we might want to work on. And then like other people might work on And then if we say, we're not working on them. So if you don't mind, with your permission as a shareholder with your best interest at heart, I'm going to just take Talk a little bit about what the future looks like in mobile advertising because we have a lot of opportunity to invest there at all as well. And then we promise we will continue to invest If you look back just a couple of years, we didn't have mobile ad. And we sit here today in I think a much better position than we Even would have hoped, which is I think we have by far the best mobile ad products on the market.
We have a tremendous amount of user time and attention on mobile. If we get in the U. S. As a proxy 1 in 7 minutes on the desktop, we get 1 in 5 minutes Facebook and then some more for Instagram On a mobile on mobile phones. And that's amazing because it shows you how deep the engagement is.
What people do more than anything else on And I think our team, our ads team, our engineers, our sales team should be congratulated for Building a product that fits so well into newsfeeds and being able to sell high quality ads that keep you engaged. That said, I think there's a lot more we can do. If you ask yourself What percentage of the ads you see on Facebook are really, really good for you as interesting to you as your organic Content, there's variability, right? We all know some people post more interesting content than others. There are some posts that Great and there are some posts that aren't as interesting.
That's true of our ads as well. But with our ads, I think we have a really big opportunity We also have an opportunity grow our advertiser base and when we grow our advertiser base around the world, we have an opportunity to offer better ads. We're up to 2,000,000 advertisers. That's largely small businesses and one thing we're really excited about, to your question of having an opportunity to do is, we've had huge numbers Post a video to Facebook. If you ask yourself how many small businesses have been able to shoot a video ad and put it on TV, It's prohibitively expensive.
But can you post a video to Facebook to your page? Yes. And so we have an opportunity to give the kinds of tools that only big companies have, Not just the big companies, we do that too, but the small companies around the world to enable you to connect with things you might otherwise not find. And I think that is a lot of things we have an opportunity to continue invest in mobile
Go ahead, Martin. Well, so one
thing that I was just going to add that's I think that that's the right answer on the business side. In terms of Products and engagement, one thing that I'm really excited that we've started working on recently, but I think we should be doing more around are enabling People in our community to help each other. It's something that people really want to do deeply, but they're not necessarily day to day things like posting a photo. So I can give you a few examples. So there was just this big earthquake in Nepal, Right.
And one of the things that we did was we built this safety check product, right. So that way Everyone who is in the proximity of the earthquake, we notified them and asked them to say if And then if they were safe and they mark themselves as safe and all of their friends found out about that. Now I mean if you've ever Had a close friend or family member in a disaster, like all you want to know is that they're sick, right? And no other product or community in the world has the reach or ability To build something like that so easily. And for the first 10 years of the company, we Ted really focused very hard on just making Muse Feed work, making messaging work, stuff like that.
But now I think we can also help build tools for the community to help each other in ways like that. I think it was do you remember the number of people who marked themselves as safe? And it was something like, it was millions, right, millions and more than 100,000,000 people got notified that We also built a tool that made it so that our community could pull together to raise money for the victims. And We enabled our community to raise more than $15,000,000 in aid, right, for to help the recovery effort in Nepal, which is bigger than most governments around the world I can give other examples. There are yes, I mean, I'm really excited about this stuff too.
We had a small team and you guys were really involved in this, built Brought Amber Alerts to Facebook, right? So that way, when young children are abducted or missing in an area, we could Show a story and a picture of that child at the top of newsfeed and we can show that in a more targeted way because we know The people in our community where they live and if someone if they're in the likely place where the child who is abducted might be. And we've already found at least one case where a child was saved because someone saw an Amber alert on Facebook and And then realized they've seen the child around them and then reported it to the police and brought the child home. So there's a lot more stuff like this And I think we're in a unique position to do this. And I think that there's a real hunger from our community to want to help each other.
And this is part of making the world more open and connected and we want to do that. And that's something that I think going forward we're going to be able to do Really excited about it and proud that we can play a part
of it.
Thank you.
Yes, SafetyCheck is exactly what I want to say. I hope there's a lot more services like that. You've built up trust with the whole world. That's important. And to Sheryl's Facebook ads, we're very happy customers.
We have multiple venture capital investments. We've made video ads that are absolutely amazing ROIs and we're Tens of thousands of users around the world at very low price points. So we're excited on both fronts. Thank you, guys.
Thanks for the question. Sir?
Hi, Mr. Zuckerberg and Board. My name is Kelvin Yook and I'm a shareholder, an engineer and an educator. I think some of the comments you already made covered some of the questions I had. But essentially, at the Twitter meeting, They had announced that they're allowing universities access to their data to conduct research, for example, to study the propagation of the flu through tweets rather than through traditional means through like clinical studies.
Now can you comment on any specific activities for studies that Facebook is supporting both internally and externally with its big data to universities in the area of science and research.
So we care a lot about contributing to the knowledge base of the world. And we have researched projects and times that we've posted I'm seeing the one I can think of that we did is one of the things we looked at over time was the conscious of filter bubbles. Does being on Facebook Make you more inclined to have the same political views or different political views. Are you by being on Facebook just exposing yourself to the same views so the world gets more polarized? What we found is that that's not true.
That what Facebook does is it actually strengthens what researchers would call your weak ties. So your strong ties are the 5 people you're closest to. Facebook doesn't really change your relationship with those people. I talked to my mom, I talked to my sister, right? But what Facebook does do is strengthen your weak So the friends from college I would not be able to keep up with or my friends from growing up in Miami, my friends from previous jobs or previous schools I attended.
And because of that, those groups actually tend to have more broad views than the people I have time or energy to act with every day. So I work at Facebook now. On a daily basis, I interact with my family, my close friends and my Facebook colleagues. Because of Facebook, the product, I can interact with people at old companies. I used to work at old places.
And so it actually broadens my views. So there are times or broadens the exposure I have. So there are times when we definitely do research projects. We're very careful with user data when we do it and we'll continue to share those learnings with the
Ma'am?
Hi, everyone. My name is Deborah. I'm the individual shareholder since IPO. I believe currently Facebook is not a dividend paying company. So I was Wondering, will Facebook be considered paying dividends to its shareholders in the future?
Well, thank you again for your question and thanks for being a shareholder with us from the IPO. That's great When we think about our capital allocation process, that's something that we take extremely seriously and we spend a lot Again, I think the focus for us today is on growth and the opportunities that we have to grow the different things that we've talked about For the near term growing the business around Facebook and the ads business, there's tons of investment opportunities we have there In the longer term around the other new services that we've built out and the other applications that we have. And then longer term beyond that, we've got things like investing in the next That's our focus from a capital allocation perspective. And so that's where we're going to be investing the most of our
James Patterson, San Francisco, former diplomat and sponsor of the state. Thank you, Mr. Zuckerberg and your wife for your generous contribution to San Francisco General Hospital. Your guests will help and heal many lives there. The boycott divestment and sanctions campaign against Israel is anti Semitic according to scholars at the Simon Wiesenthal Center in Los Angeles.
Please assure us today that the corporation is not involved in supporting this campaign.
We're not involved in supporting the campaign.
Christine Jantz, Could you please provide the estimated percentage of vote in the affirmative for Resolution 4 and also the percentages by
So we'll be reporting the final results on a Form 8 ks at the SEC within four Good morning. Michael Kuttner from Philadelphia, shareholder. First, Mr. Zuckerberg, thank you very much for your original idea many years ago and the inspiration and leadership that you've had in creating the company that we're here today talking about. 2 things.
First, I've attended a lot of annual shareholder meetings and to me the more time shareholders get to actually see the executives leading the company firsthand, The more likely you are to attract the kind of investors that are most aligned with your goals and vision for the company. So I would encourage You keep doing these meetings and extending the time. Actually the request would be extend the time as long as possible. When he said 12:10, I got a little bit nervous That I wouldn't even be able to get an answer to a question and I think I was only like 8th in line. So please if you could think extending the time you allow for Q and A.
The question I had was about the regulatory environment and it seems like Legislators are often not the experts in the industries that they pass legislation on. And food, pharma, financial industries, they all to kick themselves, trip themselves up by sometimes acting in ways that aren't in their own best interests. Even 70 years after the financial industry had some of the first regulations passed, they can't seem to avoid a juicy scandal every now and then that prompts some legislation that's not in their best interest. So first question on that is, first, how do you view the regulatory environment and the role of legislators and what they know? They probably have Facebook accounts.
And second, what kind of steps does Facebook take to help educate and inform legislators about social
Thanks. I'll take that one. First of all, thanks For your first comment, one of the things that we've done to provide more opportunity for people to ask questions and hear from our leadership is that Mark's been doing frequent Q and As in addition to the Annual So that's another great opportunity for him to share his vision for the company. I hope people hear that. On the regulatory environment and how we address it, We have an increasingly robust global public policy team around the world, because as a global company with 1,400,000,000 users, Our service around the globe, we do have governments around the world who are very interested in how our service affects their constituents and also how it helps them communicate with their constituents and their citizens and Something that we're very proud of.
So what we try to do is be really responsive to the concerns that we know those policymakers and regulators have. We want to make sure we're answering their questions because as you say, sometimes it may just be a function of them not fully understanding And our job is to go in and show them our service and show them the value it's contributing to in the world and how it's helping their constituents Let's connect with the things and the people they care about. We find that when we have policymakers who are more informed and more They're likely to make better judgments and better decisions about the rules they put in place That affect our industry and our service. And one of the things that we're particularly focused on is we want to make sure they understand the economic contribution Facebook is making and helping create jobs and drive innovation. And so we walked them through some of those contributions as well Thank you.
Hi, I'm Melanie Newkirk from Los Angeles, California. This meeting is very staged. At Berkshire Hathaway Stockholders meeting, we have a lot of fun. So this is so Hey, boy, David, it's bad, bad, bad. I wish you would have proved that, Mark.
And so doing and I'm sure I've seen my We were at Berkshire at the time that this happened. So know that I'm a practitioner at Adopting International Spiritual Center in LA. So our prayers are with you definitely. What I wanted, I saw something on TV the other day on the alternative school In San Francisco that they just started some Google, former Google employees started and they're doing programming and looking at the things that young people do in order to study. I thought that Facebook would be good to start an in your face School, say, get it, in your face, Facebook School, Even if it's cartoons or something or people answering questions in your face, young people.
I have a niece that is going to school online Atomy and what they're doing, I think that Facebook can come up with an in your face thing that young people can relate to, to study to know that it's worth studying. It's worth being in your face so that they can understand that. Now you can give me a quote on that in your face. But I think it would be a wonderful thing and it would be A fun thing to start to sort of even in a cartoon form, I think that Warren Buffett, We have some children's books and the children learn about finances and what have you and all of that sort of thing. So they can learn to learn through Facebook because they're on it all the time.
So if you would take that into consideration, Sheryl, Please along with these other things you've mentioned in your academies and other things that you deal with, but in your face, You could market that. Give it to you for free.
Thank you.
So we have time for one more question. If we didn't get to you, find one of our volunteers and just write down your question and we'll either post
Hi, I'm Kevin.
No pressure on this one, I guess. So each year Facebook becomes more and Relevance in our lives, 10 years ago it was mainly for writing on walls and updating people on what we were doing as long as that started with an is. And today we share photos and videos, post stories and learn 7 secret new drinks you can order at Starbucks. Anyway, when things happen, we post it online. Instead of texting, we use the Messenger app.
We use groups to discuss niche ideas and I use it to find out if my coworkers are single. But Essentially, where is Facebook headed in terms of further integrating into our day to day lives?
Yes, it's a great question, right. And this is I think this really goes to the heart of the strategy that we're pursuing. You can kind of think about all of the different ways that people want to connect and share. And I think that there are 2 primary dimensions that we consider. Right.
So those range from very private like a 1 on 1 message thread to a small group to A bunch of your friends at once to a large interspace community to something that's fully public. And there are going to be different products at each Point along that spectrum of how public a person wants to be. And then there are different types of media ranging From very basic text to richer forms of media that include photos, are increasingly rich and include video More and more of the time and then into the future, I think are going to become increasingly immersive and that's what drives part of our interest in these fully immersive Media types like virtual reality and augmented reality. And you've seen this progression over time where 5 years ago most of the posts on Facebook were text and Today most of the posts are images and I think 5 years from now probably most of the content will be video and then it will just continue getting richer and richer And also diversifying the other content types don't go away. So, our job is to be the best at giving people the tools that they need to share something at each point along that spectrum, right.
So if you want to share photos with Your wife, then go for it, right? And that's going to require one kind of product. If you want to share videos publicly, then that's A different kind of thing. If you want to share news links with friends or an interest community, then that's a different kind of thing. And we just want to make sure that we are serving Our whole community across the world, more than 1,000,000,000 people at this point, with world class ways to communicate in all the different ways that they want.
Increasingly that means not just building everything into a single product, but also building different products because sometimes things Require a whole app to be dedicated to private communication in order to deliver that world class experience, which we're committed So I think you'll see more of that in terms of the different audiences and types of content and just this Continual aiming to be the best way that people have to share any type of content that's important to them with any set of people that's important to them. And over the next few years, that's going to be our goal.
Thank you very much. All right.
All right.
Thank you. That was
supposed This is the last question that I'm a rule breaker from way back.
You know, we'll hear from you, but that
will be
it. And with Reverend Jackson's support. So I just want to say I'm a retired nurse from San Francisco General. So I thank you Mark for that. And Cheryl, I was very touched by the essay you wrote.
And oddly, I didn't know you had wrote it when I read it. So I was really very touched. But anyway, this addresses Proposal 3 from the proxy and also some Doctor. Jackson Reverend Jackson's excuse me. Okay.
Comments that I can't go to speak at General Electric and ExxonMobil. But I can't speak at Facebook because I'm a shareholder. And this mainly goes to the CFO. And proposal number 3 was some sort of we're going to keep this in line so that we can get More corporate tax deductions and Reverend Jackson spoke about repatriating some of the profits that the CFO And the cadre of people from Ernst, the accountants, the lawyers try to get the corporation not to pay. And I feel that as a citizen of this country that the infrastructure is falling apart, we could be the good guys and maybe my stock will go
Thank you for the comments. We are a taxpayer, of Of course, our tax rate in 2015 is a 45% tax rate on a GAAP basis. So we are a large tax And we believe that we should be contributing in the communities in which we operate in. That's both through contributing our service and through paying the taxes that we should. So thank you for your comments.
Thank Thank you everyone for coming. We appreciate your support and we will look forward to seeing you next year.