Democracy Dies in Darkness

On Leadership

Sheryl Sandberg says Peter Thiel will stay on Facebook's board

By Jena McGregor

June 1, 2016 at 6:10 PM

Facebook Chief Operating Officer Sheryl Sandberg said Peter Thiel will stay on Facebook's board: "This was something done independently with no Facebook resources." (Eric Risberg, AP Photo)

Facebook chief operating officer Sheryl Sandberg answered a question Wednesday afternoon that's been a hot topic of debate in recent days: Will Facebook -- a company that wields extraordinary influence in the media world -- keep someone on its board of directors who has personally funded a legal fight seen by many as an effort to destroy a media company?

The answer, Sandberg said in an onstage chat at a technology conference Wednesday, is yes. Speaking at Recode's Code Conference in Los Angeles, Sandberg responded to questions from tech journalist Kara Swisher and a member of the audience, saying that her fellow Facebook director, billionaire Peter Thiel, will remain on the board. The question followed the revelation last week that Thiel helped fund a lawsuit against Gawker Media involving a Hulk Hogan sex tape after negative coverage he'd received from the gossip site.

"I know this has been actively discussed here and it should be actively discussed, because issues of independence and the media are key to democracy and key to all of us," she said. "Peter did what he did on his own, not as a Facebook board member. We didn't know about it."

Sandberg's response follows days of criticism and questions over what Facebook would say about the issue. In op-eds, some journalists and corporate governance advisers had said Thiel should step down from Facebook's board or that Zuckerberg should ask him to resign.

"If Zuckerberg does ultimately allow Thiel to stay on the board, you'll know how the CEO — who holds absolute control over the world's most-powerful media company — feels about the free press," wrote technology writer Dan Gillmor at Slate.

Others raised questions over the apparent divide between Facebook's media role and Thiel's seat on the board. As Swisher put it in a post: "If you are putting yourself out there as a friend of media in order to get them to use your platform, having a director go undercover rogue in some cloak-and-dagger revenge plot to decimate a publisher is probably going to be an issue that needs some discussion."

In an interview with the New York Times last week, Thiel said his actions were "less about revenge and more about specific deterrence," saying "I saw Gawker pioneer a unique and incredibly damaging way of getting attention by bullying people even when there was no connection with the public interest."

Whatever his motivations, Sandberg was careful to distance Facebook. "We want to be clear Peter did what he did as an independent person. He didn't do it at Facebook -- we didn't know -- and he didn't use any Facebook resources," she said. "I understand there are complicated issues here, but this was something done independently with no Facebook resources."

Sandberg's answer appears to be Facebook's first official response to the issue. A Facebook spokesperson reached just before Sandberg's comments said the company had no official comment. And though Facebook founder and CEO Mark Zuckerberg had yet to address the question, his views on it would likely have become known soon.

That's because the company's annual shareholder meeting, when investors re-elect directors, is coming up on June 20. For one, it's possible that an investor could ask Zuckerberg about Thiel.

"It's fair to ask, because this bears very directly on the actual business that Facebook is in, especially now," said Nell Minow, vice chairman of ValueEdge Advisers, a governance consulting firm.

But Zuckerberg also controls more than half of Facebook's total voting power, according to a recent company filing. That means if Thiel was re-elected to the board, it would have been a clear sign the Facebook founder backed him.

"Facebook is a controlled company -- period," says Charles Elson, the director of the John L. Weinberg Center for Corporate Governance at the University of Delaware, speaking about Facebook's share-class structure, which gives Zuckerberg and others greater voting rights. "You can make an argument that that's something that needs to be thought about, but it's ultimately Zuckerberg's decision." 

Beverly Behan, a corporate governance adviser, says that when a board make decisions about directors' actions, it first examines whether something might be a material conflict of interest, and then whether something might be a judgment error that could cause reputational damage. While the former may be clear-cut, the latter can be "a harder decision when the person is already a good and valuable director," she says.

Thiel is not only one of Facebook's earliest investors, but its longest-serving member on the board besides Zuckerberg. The co-founder of PayPal, Thiel is a venture capitalist and Silicon Valley power player who gives out fellowships for high school and college students to drop out and start companies and has, in the past, been a supporter of the Committee to Protect Journalists. He has said he is a libertarian, and is expected to serve as a delegate from California for Donald Trump at the Republican convention.

Sandberg acknowledged the importance of differing views in her remarks Wednesday. "We have very independent board members with very independent thoughts that they share publicly," she said. "Those same strong people actually make really good board members because they have strong views and they're not afraid to think differently." Yet she also acknowledged "these are hard issues, and no one is going to pretend when independent board members do anything, it's easy for the company and the boards [on which] they sit." 

Read also:

The 'tremendously complex' decision facing Disney's board

Boards don't know their next CEOs

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Jena McGregor writes on leadership issues in the headlines – corporate management and governance, workplace trends and the personalities who run Washington and business.

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