Facebook hasn’t even gone public yet, but the scrutiny that comes with being a publicly traded company has already started rolling in, with the second-largest U.S. pension fund, the California State Teachers’ Retirement System, saying the social network’s board of directors is too “homogenous.”
In a letter to Facebook Co-Founder and Chief Executive Officer Mark Zuckerberg, the second-largest public pension fund in the U.S. urged the company to expand its board and, in particular, to remedy the fact that there are currently no female members.
Bloomberg reported that the $144.8 billion fund has investments in Facebook through two partnerships, and quoted the letter to Zuckerberg, from CalSTRS Director of Corporate Governance Anne Sheehan:
We are disappointed that the Facebook board will not have any women members. This is particularly glaring in view of the fact that Facebook is going public at a time when there is clear evidence that companies with diverse boards perform far better than the companies with more homogenous boards.
We realize that Facebook will be a controlled company in which the public stockholders will have little influence, but when the company’s mission and subscriber base are considered, a diverse board makes good business sense. We strongly encourage you to increase the diversity of your board prior to the IPO.
While she may not be on its board of directors, Facebook Chief Operating Officer Sheryl Sandberg wields a significant amount of power at the company, second only to Zuckerberg. Also, we have no specific proof that diversity in a board of directors improves a company’s financial performance, especially when the diversity already exists in the full-time staff, as is the case at Facebook.
Readers: Do you think Facebook should yield to the wishes of CalSTRS and diversify the social network’s board of directors prior to the initial public offering?