The California State Teachers' Retirement System (CalSTRS) is challenging Facebook over the lack of women on the company's board of directors.

In particular, the lack of women on the board is a point of concern for the pension fund which owns assets worth around $150bn and is ranked as the 17th largest pension fund in the world, according to Pension Funds Online.

CalSTRS is currently invested in Facebook through its private equity allocation in two different partnerships and says it will most likely be a common stock investor once the IPO is completed. However, the scheme's board, living up to its reputation as an activist shareholder, has now raised concerns about the social media platform's corporate governance and levels of equality.

In a letter sent on 7 February by CalSTRS, director of corporate governance Anne Sheenan writes: "We are disappointed that the Facebook board will not have any women members. This is particularly glaring in the 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."

Sheenan also points out that the Facebook board is relatively small for a company with its estimated market capitalisation and says the company, estimated to be worth over $100bn, would benefit from a larger, as well as more diverse board.

In the letter, which is directly addressed to Facebook's chairman Mark Zuckerberg, she says: "We realise that Facebook will be a controlled company in which the public shareholders will have little influence, but when the company's mission and subscriber base are considered, a diverse board makes good business sense."

Aside from Zuckerberg, Facebook's board currently includes Netflix CEO Reed Hastings, Washington Post CEO Donald Graham, former White House chief of staff Erskine Bowles, technology executive Marc Andreessen, plus venture capitalists Jim Breyer and Peter Thiel.

The company filed its initial IPO papers last week, just before the company celebrated its eight birthday. CalSTRS' stake in Facebook was set to be worth around $30m at the end of June 2011.

azeevalkink@wilmington.co.uk

First published 09.02.2012