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Bloomberg News:

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.

Successive Meetings

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.

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Fundraising Tool

“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.

BP Shareholder Attorney Robert "Bob" Schachter in Bloomberg article

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.

Avoiding Distraction

Davis declined to comment on why he resigned from BP, John Millsaps, a spokesman for the university system, said.

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Stepping Down

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.

‘Just Unethical’

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.

http://www.bloomberg.com/news/2010-06-30/bp-to-goldman-boards-becoming-hot-seats-for-conflicted-college-presidents.html

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