In the ongoing Internet commentary din since Facebook CEO Mark Zuckerberg announced COO Sheryl Sandberg will join the social media companys board of directors, much of the feedback initially praised Sandberg for becoming the first woman on the board. But then the wave of criticism came swiftly afterward.
Bloomberg Businessweek posted a story the next day headlined, Facebook Discovers Sheryl Sandberg. Why Now? And Lucy Marcus, CEO of Marcus Venture Consulting (and a female director herself), blogged for Reuters that Facebook needed more than Sandberg to qualify as diverse. It needs an outside independent director, preferably a woman with strong international experience who adds diversity of opinion, experience, skill, cultural background, and more, she wrote. This is not a matter of opticsputting a woman on the board because it looks odd not to have onebut rather an issue of good governance.
Regardless of Zuckerbergs controlling share of the company, which allows him to make final decisions about the board, the choice to appoint Sandberg has become a flashpoint for a broader coversation about the lack of diversity on American boards of directors.
In 2011, just 16.1 percent of directors for Fortune 500 companies were female, according to a report by Catalyst, a nonprofit dedicated to increasing opportunities for women at work. Worldwide, women represent just over 10 percent of board members, the most ever, according to an April report issued by GMI Ratings, an independent research firm that addresses issues of corporate governance.
I dont think we can raise our hands in joy, said Charlotte Laurent-Ottomane, speaking on behalf of the 30% Coalition, which is campaigning for 30 percent representation for female directors by 2015. While Im happy she is on that board, and she is certainly a competent board director, what they probably need on that board are independent directors. The fact that shes chief operating officer sounds like theyve made this decision to pacify us. There are certainly plenty of women out there who would love to be on that board and are equally as qualified as she is.
Sandbergs appointment highlights some tension among corporate governance scholars, according to Robert Jackson, associate professor at Columbia Law School. Jackson, who was an advisor to senior officials at the U.S. Treasury Department before joining Columbia Law School, acknowledged that, in general, corporate governance scholars dont think its a good thing to have insiders on the board, and they encourage the chairman and CEO to be separate people. But he doesnt agree with this view, and said that Facebooks dual-class stock structure, which gives Zuckerberg more control over the company, is a corporate style shareholders signed onto when they bought the stock.
But, Jackson notes, if youre going to have an insider, shes the one. This is already a company controlled by the insiders, and those aspects of corporate governance are really inapplicable here. Its really important to have a talented woman on a board like this. We simply cant afford to let talented people not serve. At this point, the board needs all the help it can get.
Paul Hodgson, a Senior Research Associate at GMI Ratings who has blogged on the subject, said organizations like GMI Ratings have built a database of qualified female candidates for directors that four of the top major search consultants use to find directors. There are some companies, household names, with five or more women directors, according to Hodgson, including Estée Lauder, Avon Products, Proctor & Gamble, WellPoint, and Wells Fargo.
On Thursday, Laurent-Ottomanes group will issue a letter to companies listed in the S&P 500 that do not have any female directors with a business proposition to hire women directors. The timing is incidental, but she said at least the Facebook announcement has the subject in the media and on peoples minds. Everyoneincluding Sandberg, she saidis ready to get back to business.