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A Mutually Beneficial Relationship

A Mutually Beneficial Relationship

For college presidents, sitting on corporate boards is a way to stay in touch with industry; meanwhile, industry stays plugged into the higher education market.

By Christina Asquith

It’s quite a coup for university presidents to land on corporate boards. Dr. Shirley A. Jackson, president of Rennsalear Polytechnic Institute, for example, sits on the boards of at least five companies, including IBM, FedEx, Marathon Oil, Medtronic and Public Service Enterprise Group Inc.

Howard University President H. Patrick Swygert, and presidents Johnnetta B. Cole, Walter E. Massey and William R. Harvey — of Bennett College, Morehouse College and Hampton University, respectively — together sit on an impressive number of corporate boards.

What makes college and university presidents attractive corporate board members? For one, they deal with a broad and diverse constituency that includes students, professors, parents, community leaders, politicians and alumni — and they bring that management and consensus-building expertise to the boardroom.

And, college presidents are essentially CEOs of small, and not-so-small academic enterprises. Afterall, higher education is a $300 billion industry.

In addition, college presidents often bring their specific scholarly expertise to corporate boards. For example, Jackson and Massey, both physicists by training, sit on the boards of some scientific- and technology-focused companies and foundations. Dr. S. Malcolm Gillis, the former president of Rice University and a professor of economics, is currently the only academic sitting on the board of the Texas-based Halliburton Co.

Major corporations also enjoy the prestige of an academic in their
midst. And indeed, presidents are compensated for sitting on corporate boards, but money is often not the motivating factor. Regardless, average annual board retainers have increased dramatically since 2001.  The average annual cash retainer portion of compensation for a director is now $63,594, up from $36,937. Further, 64 percent of boards pay equity in addition to the retainer, up from 42 percent in 2001.

“I would seriously doubt that the total impact of the amount of money a president receives is what makes the decision,” says Richard D. Legon, president of the Association of Governing Boards of Universities and Colleges. “It’s the opportunity to be part of the broader community. You get more contacts and can introduce more people into the life of your institution. You get a sense of what the corporate community is thinking of and new management ideas that might apply to your institution.” 

Rules guiding the relationship between corporate boards and university presidents are determined by individual universities and are part of the compensation negotiation process, Legon says. In most cases, presidents are allowed, even encouraged, to sit on a few corporate boards, and university trustees can dangle that opportunity as an added incentive.

“I would think that there needs to be an expressed limit to the number of external engagements that an institutional chief executive might have as part of their agreement, mostly because of the allocation of time,” Legon says. “So whether it’s one or two or three, it has to do with the expectations on the president.”

The bottom line is, some say, it’s an excellent way to keep higher education in touch with industry, and vice versa.

“The president would have a finer understanding of the nature of the sector and the competitive pressures and the directions the corporations are moving in and the kind of curricula and the experience that students need to have,” says Dr. Brian K. Fitzgerald, executive director of The Business-Higher Education Forum, an independent, nonprofit membership organization of leaders from American businesses, colleges and universities and foundations.

Did You Know
71 percent of board seats on Fortune 100 companies are occupied by White men compared to 8 percent occupied by Black men.
Source: alliance for board diversity, 2005

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