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In effect. Shirley Ann Jackson. Shalala answers to dozens of trustees. because a university president may be disinclined to question or oppose an industry executive who has a say in his or her continued employment and compensation. a Harvard Business School faculty member with expertise in corporate governance. many of whom are captains of industry. Donna E. president of Rensselaer Polytechnic Institute and one of the nation's highest-paid college leaders. too. "That's just a no-no. Ms." Presidents who serve on corporate boards have come under increased scrutiny in recent years. Ms. 2012 Sunday Board Conflicts Abound for College Chiefs BYLINE: Jack Stripling and Andrea Fuller SECTION: LEADERSHIP & GOVERNANCE. Ms. as a university president. But two of those board members also answer to her." said Mr. but at what cost? FULL TEXT As president of the University of Miami. You don't want to create. Jackson's $1. Page 1 1 of 1 DOCUMENT The Chronicle of Higher Education January 15. While corporate board service is not uncommon for university presidents. Such board service is fraught with potential conflicts of interest. So. Shalala is among a handful of college leaders who collect hundreds of thousands of dollars each year as directors for companies that are headed by or employ university trustees. also serves on the board of a company where institute trustees hold executive positions. presidents would be well advised to decline directors' positions on the boards of companies that employ or are run by university trustees. Add to those con-cerns skepticism about whether a company's . corporate-governance experts say. Lorsch.4-million in earnings from six corporate boards in 2010 was higher than such earnings by any other president examined by The Chronicle. any appearance of impropriety. Shalala's uncommon role reversal is a product of her lucrative service on the boards of two different companies headed by members of Miami's Board of Trustees. Lorsch. a Chronicle analysis has found. as some faculty and company shareholders question whether a college leader can simultaneously fulfill the duties of running a university and helping to guide a publicly traded company. Administration LENGTH: 1906 words ABSTRACT A Chronicle analysis shows that some presidents make millions from their service as company directors. may a university trustee's judgment be clouded in evaluating a president who has influence over the trustee's professional endeavors. her role as a director at a national medical group and at a home-building empire places her in the position of functioning as her bosses' boss. Given the real or perceived conflicts that may arise. "You want to be as pure as Caesar's wife. said Jay W. a professor of human relations.

and some college chiefs have opted to avoid the whole hornets' nest that corporate directorship has become. a former University of Miami trustee." Just 6 percent of the survey's participants said they had ever even been invited to serve on the board of a company where a trustee was in a leadership position. The policies require Ms. has exceeded any reasonable standard by serving on six boards while running a university. a quarter said their contracts or university policies set standards for corporate-board participation. "That's 6 percent more than we'd like. Schwartz.S. 2012 Sunday profit-making ambitions are philosophically aligned with a university's stated mission. which consults with college trustees on best practices. those from the 50 wealthiest colleges had median corporate board earnings of $239. The Chronicle has found. Among 300 college leaders who responded to a 2010 survey from the Association of Governing Boards of Universities and Colleges. in 2001. Miller. as many presidents who serve on boards are inclined to point out. Jackson earned $286. The analysis. At the same time. she answered to the Rensselaer board. Equally taboo for a president is service on a board connected to a major donor. Miller died. Miller.835 in 2010 by serving on the board of the International Business Machines Corporation.8-million in total compensation from Rensselaer in 2009. High Pay for Service Among the leaders of the nation's 50 wealthiest colleges. about one in three served on at least one corporate board in 2010. Jackson declined interview requests. which also included 25 other administrators from elite research universities. Shalala joined the board of Lennar Corporation. and some colleges have set similar guidelines. several analysts told The Chronicle. Jackson to recuse herself from votes or discussions on the terms or conditions of contracts involving companies on whose boards she serves. which includes two IBM senior vice presidents and a retired IBM executive vice president. the same year she became Miami's president. which gave a historic $100-million gift to the university in 2004. Page 2 Board Conflicts Abound for College Chiefs The Chronicle of Higher Education January 15. The company's chief executive is Stuart A." and that the board's compensation committee annually affirmed she had done so in accordance with Rensselaer's conflict-of-interest policies. a home-building company co-founded by Mr. according to the association's 2010 report. is that college leaders can learn valuable management lessons in corporate boardrooms. Ms. The Association of Governing Boards. after Mr. companies compiled by GMI. who earned $1. Miller's son. and author of the report. while also imparting their own wisdom from academe. The gift led to the naming of Miami's medical school in honor of the late Mr. A significant number of corporations either prohibit their chief executives from serving on any outside boards or limit such activities to a single board. . Ms. Jackson. several served on as many as three.998. the association's director of research. and a Miami trustee. which for most companies capture the majority of 2010. an independent research firm focusing on corporate governance. The flip side of the argument. Mr. but Rensselaer's vice president for human resources responded in a written statement that the president was expected to "build collaborative relationships with industry partners. Miller. Ms. "Higher-Education Chief Executives and Service on Corporate Boards. discourages presidents from serving on the boards of companies where a college trustee is an executive or director." said Merrill P. as measured by endowment. Though most presidents reviewed by The Chronicle served on just one board. Miller. which describes the family of Leonard M. Ms. Among presidents with at least one directorship. according to 2011 federal filings. drew upon a directory of the corporate-board membership of publicly traded U. The practice is not widespread.

Shalala and Pascal J. are of scholarly interest to Mr. Shalala and Dr. took heat for her service on the board of Goldman Sachs. and officials from Lennar and Mednax all declined interview requests. a maker of networking equipment. Cowen said he is equally leery of serving companies that seem prone to controversy. Ruth J. "You never should go on the board of a donor. Medel has helped set performance goals and allocate bonuses for both Ms. John L. also serve on the board of Mednax. Spanier served on the board of U. where a single family controls the voting shares of a company. Now he is a director at three: American Greetings Corporation. Mr. "That's one rule of thumb I use. chancellor of Vanderbilt University. a Stanford trustee and co-founder of Yahoo.. Limiting Membership Companies that appoint college presidents as directors often say they are looking for bright people with different perspectives. Medel. the departing president of Brown University. or potential. where the vice chairman of the university's board is chief executive officer. who earned $634. Zeppos. Among the companies where Mr. "There should be virtually no connection between the company and the university. are both on the board of Cisco Systems. a president who is perceived to have blind allegiance to a chief executive could wind up answering for his or her actions in court. A scholar of corporate governance. is a university trustee. Simmons. said he routinely turns down overtures to sit on more boards because he sees potential conflicts or does not have time. Goldschmidt. as financial institutions have been in the wake of the 2008 economic crisis. Prior to his November firing as Pennsylvania State University's president. but some of the nation's most-prominent college presidents do not serve on any boards at all. Dr. Ms. Shalala. Cowen is a board member. Ms. Goldschmidt. Forest City Enterprises Inc. collect no money from corporate boards. Mr. If a corporate board is thought to have failed in its duties to protect shareholders' investments. present. Companies Invite Critics While board membership for college presidents has attracted greater attention in recent years. Dr. who said he offers such companies expertise as a director. president of Tulane University. including Drew Gilpin Faust at Harvard University." Mr. Cowen.797 for service on three corporate boards in 2010. before stepping down from the board in 2010. Hennessy. Graham B. Mr. Cowen. Elson. Rubbermaid is the only one that is not family controlled. and Newell Rubbermaid Inc. a professor of corporate governance at the University of Delaware. and Jerry Yang. dean of Miami's medical school. Goldschmidt. Cowen. past. because it destroys your independence. Elson said. where she joined other directors in approving millions of dollars in controversial bonuses. 2012 Sunday Charles M. Nicholas S. Cowen has served on as many as four boards at a time during his presidency." Mr. Cowen began serving on company boards well before he became Tulane's president in 1998. Steel. a medical group whose chief executive. Stanford University's president. Roger J. it's old hat for Scott S." he said. said a president who serves on the board of a company that employs a donor or trustee invites skepticism and even legal repercussions. refuses to sit on any corporate boards and forbids his vice . Page 3 Board Conflicts Abound for College Chiefs The Chronicle of Higher Education January 15.S. The Chronicle's analysis also found an instance of a president and trustee serving alongside each other on a corporate board. Family-controlled businesses. according to company proxy statements. Half of the presidents of Ivy League universities.

Conflict. I don't want issues to arise in a company that puts Vanderbilt in a light. NETWORKING EQUIPMENT (74%)." he said. COMPANY EARNINGS (90%). College presidents. Page 4 Board Conflicts Abound for College Chiefs The Chronicle of Higher Education January 15. too. Leader. Matthew Cavanaugh. Companies Invite Critics. Newscom Conflicts Abound for College Chiefs on Corporate Boards 1 LANGUAGE: ENGLISH PUBLICATION-TYPE: Newspaper SUBJECT: COLLEGES & UNIVERSITIES (96%). SHAREHOLDER PROXIES (76%). Most-prominent college presidents. PepsiCo Inc. and Medtronic. COMPANY STRUCTURES & OWNERSHIP (90%). Corporate governance. COMPANY PROFITS (88%). and people say. Duke's conflict-of-interest policies prohibit Dr. UNIVERSITY ADMINISTRATION (90%). Industry executive. either. Analysis. Chronicle. who as president and chief executive of Duke's Health System earned more than $600. President. Dzau. Corporate-board participation. Vice chairman. CONFLICTS OF INTEREST (90%). University policies. made almost half a million dollars in 2010 from serving on three companies' boards. Director. Interview requests. University spokesman. Jack Stripling. Two of those companies are run by university trustees. Research. Corporate board service. Corporate board earnings. Governance. I don't want a conflict of commitment. a developer of medical supplies. Position. SHAREHOLDERS (90%). Valuable management lessons. Medical. Company shareholders question. Service. American Greetings Corporation. This is pure and this is impure. Brodhead's reasons but noted that Duke employees require presidential approval before serving on corporate boards. Company. CORPORATE GOVERNANCE (76%). Corporate. Critics of academics who serve on corporate boards. Compensation committee. Dr. COLLEGE & UNIVERSITY PROFESSORS (89%). PHARMACEUTICALS INDUSTRY (73%). Board Conflicts. Declined interview requests. Expertise. HUMAN RESOURCES (72%). "We don't live in a dream world in terms of. ALLIANCES & PARTNERSHIPS (79%). Dzau from making decisions about purchases or research that might involve the companies. Industry partners. has chosen to stay off corporate boards. Dzau holds positions on the boards of Alnylam Pharmaceuticals Inc. Why is Vanderbilt part of that?" Richard H. president of Duke University. Executive vice president. Chief executive officer. A university spokesman did not elaborate on Mr. Faculty member." he said. Dr. College. Board service. 2012 Sunday chancellors from doing so. "Everything is a continuum. Highest-paid college leaders." GRAPHIC: Donna Shalala. Vice president. he says. "I've got a full plate. University trustees. Company directors. Companies expertise.. Conflict-of-interest policies. University. Employ university trustees. Mr. Association. To dismiss corporate board service as inherently fraught with conflicts is foolhardy and naïve. Corporate-board membership. . Chief executive. EPA. Medical group. COMMON STOCK (69%). fail to understand that health-system administrators are now involved in major mergers and acquisitions that require a level of expertise that can only be gained in a corporate setting. Set performance goals. Brodhead. Dzau says. University presidents. Role reversal. Analysis shows. Dream world. Elite research universities. College trustees. Leadership position. Networking equipment. Vice chancellors. BOARDS OF DIRECTORS (92%). MEDICAL EQUIPMENT & SUPPLIES MFG (76%). PHARMACEUTICAL PREPARATION MFG (59%) Board. TELECOMMUNICATIONS EQUIPMENT (74%). RESIDENTIAL CONSTRUCTION (75%). president of the U. Cerns skepticism. BUSINESS EDUCATION (89%). "I don't want a conflict of interest.. College leaders. Policies. Trustee. EXECUTIVES (94%). of Miami. College Chiefs. he said. Wealthiest colleges. Senior vice presidents. Medical school.000 from three corporate boards in 2010. ECONOMIC CRISIS (74%). University president. Serving companies. Brodhead strikes a notable contrast with Victor J.

Goldman Sachs. Bright people. Duke University.S.S. American Greetings Corporation. Harvard Business School. John L. Caesar. USA (79%). Jerry Yang.. Jay W. Hennessy. Drew Gilpin Faust. PENNSYLVANIA. Miller.. Forest City Enterprises Inc. Continued employment. Shareholders. DREW GILPIN FAUST (58%) Donna E. Written statement. Medical supplies. Shirley Ann Jackson. Reasonable standard. Harvard University. TULANE UNIVERSITY (84%). UNIVERSITY OF DELAWARE (59%). PENN STATE UNIVERSITY (59%). BROWN UNIVERSITY (59%). Chief executives. The Chronicle. Stated mission. PepsiCo. Federal filings. Leonard M. Vanderbilt University. Rensselaer Polytechnic Institute. Spanier. Ruth J. Financial institutions. Simmons. Andrea Fuller. Single board. National medical group. Lennar Corporation. Tulane COUNTRY: UNITED STATES (93%) LOAD-DATE: January 17. Cisco Systems. Human resources. Richard H. Research firm focusing. Professional endeavors. U. Controversial bonuses. Charles M. 2012 Copyright 2012 The Chronicle of Higher Education All Rights Reserved . Notable contrast. DUKE UNIVERSITY (59%) University of Miami. Page 5 Board Conflicts Abound for College Chiefs The Chronicle of Higher Education January 15. Economic crisis. Steel. USA (79%) Miami. Merrill P. Schwartz. Corporate Boards. Home-building empire. Tulane University. Ivy League.. Collaborative relationships. Association of Governing Boards of Universities. Alnylam Pharmaceuticals Inc. Education Chief Executives and Service. Scott S. Brown University. Medel. VANDERBILT UNIVERSITY (59%). Goldschmidt. Shalala. Victor J. International Business Machines Corporation. Brodhead. Corporate-governance experts. Flip side. Cowen. Rensselaer board. Dzau. Elson. U. Lucrative service. Median corporate board. Jack Stripling. Presidential approval. Medtronic PERSON: JERRY YANG (59%). Rensselaer. Financial and business service. STANFORD UNIVERSITY (84%). Roger J. Legal repercussions. Home-building company. Corporate directorship. Corporate boardrooms. Corporate setting. Health System. DELAWARE.. Voting shares. University. Newell Rubbermaid Inc. Limiting Membership. University of Delaware. Pennsylvania State University. Profit-making ambitions. Lorsch. Yahoo. Stanford. Graham B. USA (93%). 2012 Sunday Company proxy statements. Executive positions. Miller's. Nicholas S. Departing president. Pascal J. Zeppos STATE: FLORIDA. Stanford University. Scholarly interest. Single family. Traded company. Health-system administrators. Company information ORGANIZATION: HARVARD UNIVERSITY (84%). Human relations.