Twitter Strengthens Its Board With This Move

Source: Twitter

Social micro-blogging site Twitter faced its fair share of detractors as made its public market debut last month. Twitter lacked any real profits... Twitter was astoundingly overvalued... and so forth.

However, one of the less covered -- but perhaps more meaningful-- criticisms of Twitter has been its lack of diversity. Twitter didn't have a single a female board member. And while this might sound like a minor storyline to some investors, Twitter shareholders should have been worried about the lack of a female presence for good reason.

In its defense, Twitter had been open that it wanted to add a female board member as soon as it found the right candidate. And thankfully, that day has come: Twitter announced on Thursday that it would be welcoming Marjorie Scardino to its board.

Who is Marjorie Scardino?
Scardino brings a wealth of publishing and media expertise to Twitter. She's best known for her role at publishing giant Pearson, where she served as CEO from 1997 to 2012. In her time at the helm of Pearson, Scardino helped grow Pearson into the world's largest publisher. In the process, Pearson's revenue and operating profits both tripled. Her track record speaks for itself.

Scardino's experience at Pearson was also broadly international. Pearson gets well over 80% of its revenue from markets outside the U.K., its home base. This kind of expertise seems especially well-suited to helping Twitter achieve one of its most important strategic goals: international monetization.

In its S-1 filing, Twitter revealed that in the previous three months, 76% of its monthly active users were outside the United States. However, those same international users only accounted for 26% of Twitter's consolidated revenue during the same period. With her deep expertise in running a complex, global business, Scardino's talents certainly seem well-aligned with Twitter's top needs.

There's also plenty of data to support the idea that Twitter stands to gain from adding its first female director.

Gender diversity should help Twitter
There's admittedly a lot of debate about the importance of gender diversity on a company's board. But there's a growing body of research that demonstrates companies with gender-diverse boards tend to outperform both broad market indexes -- and male-only boards.

For example, research from Credit Suisse found that over a six-year period, stocks of companies that had at least one female board member outperformed stocks of companies with male-only boards by 26%. Similarly, a study conducted by Thompson Reuters found that companies lacking women on their boards "underperformed, on average, relative to gender-diverse boards."

Foolish bottom line
There were a whole host of reasons that Twitter wanted and needed a female board member. Thankfully, with the recent addition of Scardino, Twitter has now added one very capable female voice. Twitter still needs to make major progress toward other key business objects (like actually making money!). But this move should inspire confidence in Twitter investors.

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