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UC Regents address conflict of interest incidents with new policy

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JESSICA GLEASON | FILE

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JUNE 12, 2016

At its meeting May 31, the UC Board of Regents unveiled a comprehensive proposal to limit incidents of conflicts of interest among senior management.

Building on pre-existing policy, the proposal includes a string of measures — such as limiting the number of compensated corporal positions senior leaders can hold and making the approval process to serve on corporate boards more rigorous — to ensure senior management members fulfill their commitments to the university.

“We hire our chancellors and our CEOs to be full-time stewards of our institutions,” said Regent Monica Lozano at the meeting, noting that advisory board positions for unaffiliated corporations often require a large chunk of time and attention.

According to Regent Bonnie Reiss, the proposal aims to restore public trust in university administration and prevent future conflicts of interest following contentions surrounding  UC Davis chancellor Linda Katehi, who served on the board of one for-profit corporation without approval.

Similar conflict of interest incidents have unfolded over the past year. Regent William De La Pena, for instance, was found guilty of arranging an unapproved financial deal involving his eye clinics this March.

Reiss said the new policy would cap the number of boards on which senior leaders could serve from three to two, consistent with the policy the California State University system has. Lozano also noted that most corporate CEOs were only allowed to serve on one external governance board.

At the meeting, Reiss said that general public might distrust leaders who earned generous salaries from corporate governance roles. Regent Eloy Ortiz Oakley echoed Reiss’ concerns, noting that related policy should be geared toward the concerns of the public without discouraging senior management from joining boards.

Some regents, however, voiced concern about the proposal. Regent Eddie Island said piling board service restrictions onto existing policy could dissuade future senior leaders from joining the university and hinder their ability to secure donations for the institution.

Island added that revising policy would not prevent some senior leaders from violating it still and that sensitivity about board service in response to Katehi’s actions was “overblown.”

“It wasn’t the policy that was the problem — it was an individual’s diminishment of it,” Island said at the meeting. “We don’t have a good handle or good articulation for why (capping the number of compensated boards senior leaders can serve on) is a thing of substantial value to the institution.”

According to university spokesperson Dianne Klein, senior leaders often serve on advisory boards to maintain involvement in their campus communities and dispel the illusion of living in “ivory (towers).”

Regent Russell Gould also said the revised proposal should include a stricter statement discouraging such conflicts of appearance from happening in the first place.

“At the end of the day, we’re not going to make everyone happy,” Oakley said at the meeting. “If we can at least articulate why we’re making the decision … and what value we think this service brings to the university, I think we can at least move the ball forward.”

Corrections: 
A previous version of this article incorrectly stated that Linda Katehi is the former chancellor of UC Davis. In fact, she was placed on a 90-day paid administrative leave from her position.
A previous version of this article incorrectly stated that Katehi sat on the boards of two for-profit corporations without approval. In fact, Katehi’s seat on the John Wiley and Sons board was approved by UC President Janet Napolitano. Katehi’s appointment to the DeVry Education Group’s board was still under consideration.
 

 

Contact Kimberly Nielsen at [email protected].
LAST UPDATED

JUNE 29, 2016


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