The disconnect puts the social-media company at odds with others in the industry that have at least one female director, including LinkedIn Corp. and Google Inc., and from most big public companies in the U.S. Just 11.3 percent of the Fortune 500 had male-only boards last year, according to Catalyst, a New York-based nonprofit that researches women and business issues.
“We’re long past having to defend or explain why women should be on boards, given all the data that shows how companies with female as well as male directors perform better,” said Anne Mulcahy, former chairman and chief executive officer of Xerox Corp. and a director at Johnson & Johnson Co., Target Corp. and Washington Post Co. “It’s unfortunate when companies with a large percentage of women constituents don’t reflect that in their boardrooms.”
A Catalyst survey of Fortune 500 companies found that those with three or more female directors outperformed those with fewer between 2005 and 2009, achieving on average 43 percent better return on equity. As Facebook prepares to raise $5 billion in an initial public offering, the composition of its board shows its business strategy is faulty, said Susan Stautberg, co-founder of New York-based Women Corporate Directors, which promotes female board membership.
“It doesn’t make sense for a company that claims to be so forward looking to not have any women directors,” she said. “If they just have an old boy’s network in the boardroom, they won’t have access to diverse ideas and strategies.”
Female Public Face
Facebook, which began eight years ago in a Harvard University dorm room, had sales of $3.7 billion in 2011. Fifty- eight percent of its users are women, according to a 2010 survey by the Pew Internet and American Life Project that found women spend more time than men making status and profile updates and commenting on others’ posts.
The board’s makeup is surprising considering Facebook’s chief operating officer, Sheryl Sandberg, is an outspoken advocate for gender equality, said Malli Gero, executive director of 2020 Women on Boards. The public face of the Menlo Park, California-based company, Sandberg, 42, is Facebook’s best-paid senior executive, receiving $30.9 million in compensation last year. She may own up to 1.7 percent of the company after the IPO, and at the top end of the valuation range expected for the offering, her stake may be worth $1.7 billion.
“It’s surprising and disappointing that Facebook has zero female directors because Sandberg is so powerful at the company and so outspoken in favor of women advancing,” said Gero, whose Boston-based nonprofit is campaigning for 20 percent female representation on U.S. boards by 2020.
Sandberg, a Walt Disney Co. director, was co-chairman of the World Economic Forum in Davos, Switzerland. Her activism on gender issues extends to her personal network. Last year, when her friend and EBay Inc. CEO John Donahoe asked for her to recommend a woman to join EBay’s board, she referred him to candidates including Katie Mitic, an executive at Facebook, said John Pluhowski, a spokesman for San Jose, California-based EBay. Mitic joined the EBay board in September.
Sarah Feinberg, a spokeswoman for Facebook, declined to comment on the board’s composition.
‘More Diverse Representation’
Its makeup clashes with the networking website’s ambition to be an agent for equality and openness, Stautberg said.
Mark Zuckerberg, the 27-year-old founder, chairman and chief executive officer, wrote in a letter submitted with the IPO filing that Facebook’s “social mission” is “to make the world more open and connected” and “give everyone a voice and to help transform society for the future.”
Zuckerberg has 56.9 percent voting control of Facebook shares, which some corporate-governance experts have said gives one person too much power.
The other directors are Donald E. Graham, chairman and CEO of The Washington Post Co.; venture capitalist Marc Andreesen, co-founder of Netscape Communications Corp., James W. Breyer, CEO of Breyer Capital; Peter A. Thiel, co-founder of Palantir Technologies Inc. and a fund manager at Clarium Capital LLC; Reed Hastings, chairman and CEO of Netflix Inc.; and Erskine B. Bowles, president emeritus of University of North Carolina.
It’s a board drawn largely from the male investor community as is often the case at Silicon Valley start-ups, said Mulcahy, who groomed Ursula Burns to succeed her at Xerox, where four of 11 directors are women.
As Facebook and other young companies mature, “they need to break out of this pattern and have more diverse representation,” said Mulcahy, who is chairman of Save the Children Inc. “And women also need to be better represented in the private equity industry.”
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