Most of Facebook Inc’s more than 800 million users are women. You wouldn’t know it from looking at the board, whose seven directors are all men.
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 US. 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 US$5 billion in an initial public offering (IPO), 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.”
Facebook, which began eight years ago in a Harvard University dorm room, had sales of US$3.7 billion last year. 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 US$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 US$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 US 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.