Facebook Names COO to Board, CEO Grooming or Shareholder Pressure?

Facebook took the unusual move of naming its chief operating officer Sheryl Sandberg to its board of directors. When such a move is taken, it’s often viewed as grooming the COO to eventually replace the CEO.

That’s what happened at Advanced Micro Devices when they named Dirk Meyer to the board and at Dell when they appointed Kevin Rollins to the board. Both of these COOs were eventually named CEO.

Sandberg Next in Line?

Facebook’s COO is a more than qualified to take the helm of the social networking giant, given the success she’s had at Facebook and at her former employer Google.  Facebook founder and CEO Mark Zuckerberg also speaks of her capabilities in glowing terms:

“Sheryl has been my partner in running Facebook and has been central to our growth and success over the years…Her understanding of our mission and long-term opportunity, and her experience both at Facebook and on public company boards makes her a natural fit for our board.”

And now that Facebook is a public company, it’s always a good thing to show investors there’s a clear CEO succession plan in place should the top executive suddenly perish. Naming the COO to the board is one way to do that. It also helps board members become more familiar with the COO in question, so when it’s time for a change it can be viewed as a rather seamless step.

But despite these common reasons why companies name their COO to their board of directors, executive recruiter Jon Holman says Sandberg doesn’t fit the mold.

Grooming or Shareholder Pressure?

“She already gets a lot of exposure to the Board, and she’s clearly the only candidate for CEO if Mark gets hit by a truck, so putting her on the Board enhances that very little,” says Holman, president of executive recruiting firm The Holman Group.

Holman surmised that Facebook’s action to diversify its all male board with a woman to serve as the eighth member was driven by shareholder pressure.

“Public companies are slow to put anyone other than the CEO on the Board, because it can be awkward to have two people in a reporting relationship on a Board,” Holman says.  “There’s no doubt the outside pressure had something to do with it.”

Indeed. In February, prior to its IPO, the California State Teacher’s Retirement System sent a letter to Zuckerberg, expressing its disappointment that no woman sat on the social networking giant’s board, the WSJ says. And the letter went on to highlight improved performance by those companies with a diversified board.

Zuckerberg’s In Control

“I doubt if Mark is worried about control, with their odd voting structure, he has all the control he needs,” says Holman, noting Zuckerberg retains more than a 50 percent stake in the company. “He could fire any director who gives him a hard time, though I doubt he would do that.”

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