As much as higher education and corporate America would like to be engaged, college presidents are struggling to reconcile the demands and values of academia with shareholder skepticism about their boardroom commitments.
Marathon Oil Corp. investors cast 67.5 million votes against Rensselaer Polytechnic Institute President Shirley Ann Jackson in April after a shareholder questioned whether she had time to serve. At Goldman Sachs Group Inc., Brown University President Ruth Simmons declined to stand for reelection in May, citing time demands, amid student criticism of her tie to the company, which was involved in the Wall Street meltdown.
University System of Georgia Chancellor Erroll B. Davis Jr. is a defendant in at least two lawsuits stemming from BP Plc’s oil spill in the Gulf of Mexico, even though he quit BP’s board in April, five days before the spill began.
“For university presidents, sitting on a corporate board used to be a resume enhancer and a networking opportunity,” Nell Minow, chairman of the Corporate Library, a Portland, Maine, company that evaluates board performance, said in an interview. “Now it is a genuine and very demanding task with some daunting liability -- reputational and financial.”
Companies recruit college presidents to add independent voices on boards dominated by corporate officers. Shareholders question the college leaders’ availability for board tasks. Campus critics say chancellors, provosts and presidents should be focusing on budget cuts and shrunken endowments, and are tainted by the behavior of companies they serve.
Jackson of RPI, in Troy, New York, sits on five corporate boards, more than most college presidents, after stepping down from a sixth in April. She traveled to Milwaukee and Houston to attend shareholder meetings for International Business Machines Corp. and Marathon Oil on two successive April days.
Shareholders at IBM, Marathon Oil, FedEx Corp. and NYSE Euronext filed proxy statements this year or in 2009 questioning Jackson’s ability to juggle jobs.
“Nobody should be sitting on that many boards,” said Emil Rossi, the trustee for shares who filed a proxy statement with his son to protest Jackson’s board nomination at Armonk, New York-based IBM, the world’s largest computer-services provider. Of 14 candidates, Jackson placed 11th in the voting and retained her seat. While getting the fewest votes for election at Public Service Enterprise Group Inc., a Newark, New Jersey-based utility, she also held her board post there.
Founded in 1824, RPI is the nation’s oldest technological university, according to its website. Jackson earned $1.6 million from RPI in the year ended June 30, 2008, making her the highest-paid leader of a nonprofit private college in the U.S., according to the latest rankings by the Chronicle of Higher Education.
Jackson also reaped $982,628 in fees and other compensation such as stock awards from IBM, Public Service, New York-based NYSE Euronext and Marathon Oil in 2009, plus $403,823 from FedEx and Medtronic Inc., a Minneapolis-based medical-device maker, for their latest completed fiscal years, proxy statements show.
Faculty members said Jackson isn’t devoting enough attention to RPI’s endowment losses and credit issues. In May 2009, RPI had its debt downgraded to A3 from A2 by Moody’s Investors Service. While retaining the rating, Moody’s in March changed RPI’s outlook to “stable” from “negative.” RPI’s endowment fell 23 percent in a year, to $612.8 million on June 30, 2009, according to the National Association of College & University Business Officers, based in Washington.
“Her first priority needs to be this university,” said Jim Napolitano, a professor of physics at RPI since 1992.
While Jackson declined to be interviewed, her participation on corporate boards has “resulted in wide-ranging pathways of opportunities for Rensselaer students and faculty, and the university as a whole,” William Walker, a spokesman for the university administration, said in an e-mail.
The board of trustees voted unanimously this month to keep Jackson as president for 10 more years, RPI said in a statement on June 15. The board cited “historic and significant accomplishments,” including fundraising, faculty recruitment and buildings.
Jackson, 63, a physicist who formerly headed the U.S. Nuclear Regulatory Commission, has also earned praise from the companies she serves.
“It is clear that the overwhelming majority of IBM’s stockholders appreciate her contributions to the company,” Edward Barbini, a company spokesman, said in an e-mail.
Jackson is a “tremendous asset” to FedEx, where she has served since 1999, Jess Bunn, a company spokesman, said in an e-mail. FedEx, based in Memphis, Tennessee, is the world’s largest air-cargo carrier. At Houston-based Marathon Oil, where Jackson also remains on the board, she is “a valued contributor, with a keen attention to detail and breadth of knowledge,” Lee Warren, a company spokeswoman, said in an e-mail.
College presidents began serving on for-profit boards at least 30 years ago, and the number has risen in the past two decades, said James H. 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 one-third of the presidents served on one to five boards, mostly in finance, manufacturing and technology.
Board service was once focused on the most-elite institutions, and expanded to less-prestigious schools, Finkelstein said.
“Universities are feeling the pressure for fundraising, and they think creating these linkages will bring them more philanthropy, although there’s no evidence to suggest that actually happens,” Finkelstein said in an interview.
Davis, the Atlanta-based chancellor of the 35-campus University System of Georgia since February 2006, retired from the BP board on April 15. On April 20, an explosion at a well in the Gulf of Mexico led to the largest oil spill in U.S. history.
Having been a member of BP’s committee on safety, ethics and environment assurance, Davis was named as a defendant in a class-action lawsuit over investor losses in the wake of the spill, said Robert S. Schachter, an attorney at New York-based Zwerling, Schachter & Zwerling, which filed the complaint in federal court in New Orleans on June 8.
The suit, on behalf of investors who purchased BP securities from Feb. 27, 2008, to May 12 this year, alleges that “false and misleading statements were issued by BP, saying that safety was their number-one priority,” Schachter said. Davis is also a defendant in a suit filed in Lafayette, Louisiana, on May 21, according to court records. The value of BP’s American depositary receipts has fallen about 53 percent since the day before the well explosion.
Davis declined to comment on why he resigned from BP, John Millsaps, a spokesman for the university system, said.
In a June 21 letter to the board of regents that supervises the university system, Davis said he won’t be distracted by BP litigation. For members of corporate boards to be sued is “the norm,” he wrote.
“As a director on the boards of major corporations, I have been named numerous times over the years in lawsuits,” Davis wrote. “Not once in my capacity as a board member have I ever had to give a deposition or prepare for trial. I expect that to be the case in this instance, as well.”
Davis, 65, joined the board of London-based BP in December 1998, and previously served as a director of Amoco, a company acquired by BP, according to a regulatory filing. Davis is also a board member at Detroit-based General Motors Co. and Union Pacific Corp., the rail-transportation company based in Omaha, Nebraska.
Opposition from critics, both on campus and off, may drive university officials from corporate boards. E. Gordon Gee, president of Ohio State University, left Massey Energy Co., a coal-mining company based in Richmond, Virginia, in July 2009, after nine years on the board, amid criticism he was abetting a polluter. The following April, an explosion at the company’s Upper Big Branch mine in West Virginia killed 29 people.
Before the resignation, a Cleveland-based nonprofit group called Ohio Citizen Action had collected signatures and letters from more than 6,800 Ohio residents, including students, faculty and alumni of Ohio State, urging Gee to leave Massey, said Kate Russell, an organizer of the protest.
The group opposes what Russell said is Massey’s practice of mountaintop-removal mining that adds waste to waterways. Gee’s service at Massey was hypocritical because he was promoting alternatives to fossil fuel while receiving fees from the coal company, Russell said in an interview.
“As a university president, he shouldn’t serve on the boards of companies whose ability to make their profit is at the detriment of local communities,” Russell said.
Gee, 66, declined to comment, said Shelly Hoffman, a spokeswoman for the university, in Columbus, Ohio. Gee remains a board member at Bob Evans Farms Inc., a restaurant operator, and Grange Mutual Casualty Co., two companies also based in Columbus.
Gee isn’t the only college official to find his, or a school’s, reputation affected by a corporate tie. At Brown, in Providence, Rhode Island, students expressed concern that Simmons’s involvement as a Goldman Sachs board member tainted the university, said Simon Liebling, 20, a columnist with the Brown Daily Herald, the student newspaper.
“When Goldman became a pariah of Wall Street and poster boy for greed and excess, Brown was tied up in that,” Liebling said in an interview.
Simmons, 64, joined the Goldman Sachs board in January 2000, while she was president of Smith College in Northampton, Massachusetts.
Simmons was a member of Goldman Sachs’s compensation committee, according to company filings. In 2007, the group approved a $67.9 million bonus, still a Wall Street record, for Chairman and Chief Executive Officer Lloyd Blankfein. The U.S. Securities and Exchange Commission said in a lawsuit in April that Goldman Sachs had misled investors in mortgage-linked securities designed to benefit a favored client at others’ loss. The company denied wrongdoing.
Goldman Sachs said in February that Simmons wouldn’t stand for reelection because of her need to spend more time at Brown. Simmons said in an interview that criticism in the student newspaper about her tie to the bank had “zero” to do with her decision. She remains a director of Dallas-based Texas Instruments Inc., the second-largest U.S. maker of computer chips.
“Right now, the idea is I might be able to handle one” directorship, Simmons said in an interview. “It’s not complicated, if you know the semiconductor industry.”
Simmons is one of five presidents in the Ivy League who serve on for-profit boards -- one for each president --according to the universities. The Ivy League consists of eight institutions in the northeast U.S.
Richard C. Levin, president of Yale University in New Haven, Connecticut, is a director at New York-based American Express Co., the biggest U.S. credit-card issuer by purchases.
Lee Bollinger, president of Columbia University in New York, is a board member of Washington Post Co., the media and education company with headquarters in the U.S. capital.
Amy Gutmann, president of the University of Pennsylvania in Philadelphia, sits on the board of Vanguard Group, a mutual- fund-management company in Valley Forge, Pennsylvania.
Shirley Tilghman, president of Princeton University in Princeton, New Jersey, is a director at Google Inc., the web-search company in Mountain View, California.
Outside the Ivy League, John Hennessy, president of Stanford University near Palo Alto, California, also is Google director. In addition, he is a board member at Cisco Systems Inc., the biggest maker of computer-networking equipment, based in San Jose, California, and Atheros Communications Inc., a Santa Clara, California-based maker of electronic products used in communication networks.
Susan Hockfield, president of the Massachusetts Institute of Technology in Cambridge, is a board member of Fairfield, Connecticut-based General Electric Co., the world’s biggest maker of jet engines, power-generation equipment and locomotives.
In January, the board of regents of the 10-campus University of California system, based in Oakland, limited to three the number of for-profit boards that chancellors and other senior leaders can join, said Steve Montiel, a spokesman.
The university system made permanent the interim rules it had adopted in January 2007. That year, Marye Anne Fox, chancellor of the University of California, San Diego, quit as a director of Pharmaceutical Product Development Inc., a consulting company based in Wilmington, North Carolina, to hold her board positions to three.
Jeffrey Gattas, a spokesman for the university, said Fox, a 62-year-old chemist, declined to comment.
Even a single board seat can arouse controversy.
University of Washington Provost Phyllis Wise won appointment to the board of Beaverton, Oregon-based Nike Inc. in November. Two months later, a group of faculty members asked her to step down. As provost and executive vice president, Wise is the second-ranking official of the public university, whose largest campus is in Seattle.
Wise’s role as a Nike director poses a conflict of interest because the company and the school do business with each other, said Janelle Taylor, leader of the University of Washington chapter of the American Association of University Professors, the advocacy group based in Washington, D.C.
A 10-year arrangement with Nike gives 23 campus teams free shoes, apparel and equipment and provides $725,000 annually to the athletic department -- a total value of at least $35 million to the school, according to the athletics department. In return, Nike gains exposure for its products.
University President Mark A. Emmert wrote to Nike, most recently in April, asking the company to pressure contractors to provide severance pay to minimum-wage workers who lost jobs. Two plants had closed in January 2009 in Honduras, where subcontractors produced Nike collegiate products, according to the university’s Advisory Committee on Trademarks & Licensing.
“We’ve been pressuring the school to cut our contract with Nike,” said Eunice How, 20, an undergraduate who is a member of the Student Labor Action Project, a group that advocates workers’ rights. “Provost Wise being so entwined with Nike is just unethical.”
Not so, said Wise. She said she won’t be involved in renewal of the Nike contract, which expires in June 2019, and is at least “two or three steps removed” from dealings between university officials and the company.
“The concern about a conflict of interest there is unfounded,” Wise, 65, said in an interview.