Stanford President Adds to Technology Fortune With Atheros Deal

Stanford University President John Hennessy stands to gain a windfall from Qualcomm Inc.’s $3.2 billion purchase of Atheros Communications Inc., adding to the tens of millions he’s amassed through ties to Silicon Valley.

Atheros, which he co-founded, fetched $45 a share in a deal this week, 22 percent more than its trading price before reports of the takeover surfaced. Hennessy held 32,899 shares when he last reported his stake a year ago. That would generate $1.48 million from the sale -- on top of what he’s made from stock sales since Atheros went public, when he owned 600,000 shares.

Hennessy has used his time at the Northern California school, along with his computing know-how, to forge relationships with some of the biggest technology companies. After founding Atheros in 1998, he joined the board of Cisco Systems Inc. in 2002 and became a Google Inc. director in 2004. He’s currently the lead independent member of Google’s board.

Hennessy’s role in Silicon Valley makes him unique in the academic world, said Ben Hermalin, a finance professor at the University of California, Berkeley’s Haas School of Business.

“I haven’t heard of a university president who’s founded a company that got bought out for billions of dollars,” Hermalin said. “It’s a pretty good job if you can get it.”

An electrical engineer, Hennessy joined Stanford in 1977 as an associate professor and has written two textbooks on computer architecture design. He was named president in 2000. His day job at Stanford paid $702,771 in compensation last year.

Director Pay

Cisco paid Hennessy $331,000 for his board duties last year, company filings show. He earned $497,156 at Google and $86,000 at Atheros in 2009.

Hennessy also co-founded MIPS Computer Systems, a chip designer, during a sabbatical year in 1984. That company went public in 1989 and was bought by Silicon Graphics International Corp. in 1992. MIPS was spun off again in 1998.

By 2007, Hennessy had made $43 million in compensation and stock sales from the companies he was involved with, according to a Wall Street Journal article at the time.

In the past four years, Hennessy has sold about 135,000 shares of Atheros, which went public in 2004. That generated at least $3.6 million. Last year, he also sold $4.8 million in Google stock.

Hennessy declined to comment for this story, said Lisa Lapin, a spokeswoman for Stanford.

Board Members

Hennessy isn’t the only college president with corporate connections. Princeton University President Shirley Tilghman is also a director at Google; Richard C. Levin, president of Yale University, is on the board of American Express Co.; and Columbia University President Lee Bollinger is a director of Washington Post Co.

University of Pennsylvania President Amy Gutmann sits on the board of mutual-fund company Vanguard Group Inc., while Susan Hockfield, president of the Massachusetts Institute of Technology, is a director of General Electric Co.

Companies recruit college presidents to add independent voices to boards dominated by corporate officers. They began serving on for-profit boards at least 30 years ago, and the number has risen in the past two decades, said James Finkelstein, a professor of public policy at George Mason University’s campus in Arlington, Virginia.

Finkelstein surveyed more than 100 universities in 2000 and found that a third of the presidents served on one to five boards. He’s currently on sabbatical updating the study, and a sample size is showing similar results.

“It appears that 35 percent or so of the presidents serve on boards,” he said. “It is certainly possible for a director of a company to have substantial gains as a result of the stock grants or stock options they’ve received.”

To contact the reporter on this story: Ryan Flinn in San Francisco at rflinn@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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