Last year, we posted several times, most recently here, about the leadership and governance of Dartmouth College, which is, despite its name, one of the elite American universities, and home to a prestigious medical school. Dartmouth is unusual in that it allows some of its board of trustees to be elected by alumni. Furthermore, it allows candidates to be nominated by petition of the alumni. Many US colleges and universities' boards are entirely self-appointed. Those that allow elections usually restrict these to a few seats, and usually only permit candidates chosen by the board, university administration, or their agents. Therefore, the top leadership of most US higher educational institutions is mostly self-appointed. Dartmouth is a partial exception to this pattern, and seems to have a governance structure that is more representative (at least of one key constituency, alumni) and more transparent than most US institutions of higher education.
However, the unelected members of the Dartmouth board felt uncomfortable with the proportion of elected board members, once nearly half of the board. They proposed to increase the number of self-appointed trustees. The board chairman, Charles E Haldeman, Jr, justified this change as a way to make sure that the board "has the broad range of backgrounds, skills, expertise, and fundraising capabilities needed to steward an institution of Dartmouth's scope and complexity." He also asserted that the enlarged board would be "representing even more diverse backgrounds [which] will help us enhance board engagement with key areas of the college."
At the time, it was not clear to me whether these supposed advantages would compensate for the possibility that the new board, more enriched with self-appointed members, would be less representative and transparent.
Although there was considerable opposition to this plan, it was eventually put into action in 2007. The board has now been enlarged. I thought it would make sense, one year later, to see what the enlarged board looks like, and especially to see how broad its "backgrounds, skills, and expertise" are, and whether its members have "even more diverse backgrounds."
Dartmouth at least makes the biographies of its trustees easily available (link here), so here is a brief summary of the current roster of self-appointed trustees, first those whose appointments came before 2007:
- Leon D Black - "Leon Black founded Apollo Management, L.P. a global alternative asset manager, with a proven track record of successful private equity, distressed debt and mezzanine investing."
- Russell L Carson - "Mr. Carson has been a General Partner of Welsh, Carson, Anderson & Stowe (WCAS), one of the country's largest private investment firms, which he co-founded."
- R Bradford Evans - "Brad Evans is a Managing Director of Morgan Stanley and a Vice Chairman of the Firm's Investment Banking Department. "
- Karen C Francis - "Currently Ms. Francis is consulting with venture capital firms and Silicon Valley companies...."
- Charles E Haldeman Jr (Chair) - "Ed Haldeman is Chairman of Putnam Investment Management, LLC. He has been a Trustee of the Putnam Funds since 2004 and President of the Funds since 2007."
- Pamela J Joyner - "Pamela J. Joyner has more than 25 years of experience in the investment industry. She is the Managing Partner and Founder of Avid Partners, LLC. Ms. Joyner's expertise is advising investment managers and private investment groups in developing and implementing investment strategies in the alternative investment arena."
- Albert G Mulley Jr - "Albert Mulley is Chief of the General Medicine Division and Director of the Medical Practices Evaluation Center at Massachusetts General Hospital and Associate Professor of Medicine and Associate Professor of Health Policy at Harvard Medical School."
So, six of seven "charter" trustees appointed before their numbers were expanded are leaders of finance, and one is an academic physician. The six in finance are "diverse" to the extent that two appear to be in asset and investment management, one in private equity, one in what used to be investment banking, one in venture capital, and one in mutual funds.
Now, consider the new appointees:
- Jeffrey R Immelt - "Mr. Immelt was appointed as CEO in 2001 to lead GE...."
- Stephen F Mandel Jr - "Steve Mandel is the founder of Lone Pine Capital (LPC), a long/short and long-only equity money manager which he started in 1997."
- Sherri C Oberg - "Ms. Oberg is president, chief executive officer and director of Acusphere, Inc., a specialty pharmaceutical company."
- John A Rich - "Chair, Department of Health Management and Policy and Director, Center for Academic Public Health Practice, Drexel University School of Public Health."
- Steven Roth - "Chairman and Chief Executive Officer, Vornado Realty Trust"
- Diana L Taylor - "Ms. Taylor joined Wolfensohn & Company, a strategic consulting and investment firm, in 2007...."
So with the addition of this new group, nine of 13 "charter" trustees are leaders in finance, now including three in asset management, two in private equity, one in the field formerly known as investment banking, one in venture capital, one in mutual funds, and one in strategic consulting and investment. Of the remaining four, one is the CEO of a large diversified corporation that has a major finance subsidiary. The remaining three are two physicians and a pharmaceutical corporate CEO.
This is a diverse board? Chairman Haldeman had to be joking, or maybe his idea of diversity means including private equity along with investment banking and mutual funds, etc...
So the ostensible changes made to make Dartmouth leadership more diverse and broadening their array of talents seems instead to have maintained a leadership dominated by people in only one small sector of the economy, finance.
Maybe this could be justified if we knew that leaders of finance were particularly brilliant, and had skills and values particularly useful to the supervision of academic institutions.
Up to this year, there were those who did believe that people in finance were particularly brilliant. That, of course, was before the global economic meltdown, or financial collapse of 2008, or whatever it will be called. There is considerable consensus about the causes of this collapse, so I think it would be apt to quote the Conference Declaration from the recently concluded 13th International Anti-Corruption Conference:
In the final months of 2008, the world has faced a financial and economic crisis unprecedented in recent history. Illuminating a new level of interconnectedness; market failure has moved outwards from the mortgage sector to engulf credit and stock markets, and the global economy more broadly.
Facing a prolonged and painful recession, the gains of emerging economies are already being erased and the economies of the lowest-income countries are being put under further strain. We recognised the central role of transparency and accountability in mitigating the crisis and preventing future failures. And we underscored that the poor are not able to bear the cost of the greed and mismanagement of financial professionals half a world away and that better development - to which the fight against corruption is central - must remain at the top of the global agenda.
There is considerable consensus that globally the leaders of finance exhibited stunning "greed and mismanagement," and many have also charged they have exhibited arrogance, stupidity, and in some instances corruption. At the moment, and in retrospect of course, it would be hard to identify a group of people less appropriate to lead an elite academic institution than members of the group once dubbed "the masters of the universe."
Yet leaders of the now mostly discredited finance sector had managed to take over the leadership of a storied academic institution, home to a renowned medical school. It is quite possible that further investigation will show that the former "masters of the universe" took over the leadership of quite a few revered academic institutions, including academic medical institutions. Perhaps this will turn out to explain some of many problems that have afflicted academia, and academic medicine in the last 20 years.
In any case, all who care about education, and about academic health care, need to start thinking about how to re-engineer the leadership and governance of our formerly admired institutions.
11 comments:
The greater Dartmouth Community, though not fools, has been fooled.
livin the fall, a fall from grace,
let no man steal the opportunities
of those who struggle so.
The post by Dr. Poses contains several errors that affect its conclusions. My prescription is a strong dose of the facts, a reduction in the consumption of self-serving propaganda, and a rewriting.
Several universities allow trustees to be elected by alumni, but Dartmouth is not one of them. Dartmouth's board has been a self-perpetuating corporation since it was created. It is not a representative body. Individual trustees are not self-appointed, they are appointed by the board. The appointments are made by majority vote from nominees provided by the board itself or the alumni, except for two ex officio members (the "unelected members of the Dartmouth board"). The board's meetings are private ("secret") and not especially transparent.
All trustees present at the crucial meeting voted on the expansion question, and a sufficient proportion (votes are not released and are ostensibly unanimous) voted in favor. It was not the "unelected members" who proposed or passed the amendment, it was, for our purposes, the board itself.
Haldeman never promised anyone, let alone the members of the general public, that he had the personal ability to make the board more diverse, or that he could somehow force the rest of the board to vote for certain nominees. He explained the decision not to draw half of the five new trustees from alumni nominations on the basis that doing so would give the board more control over selection. This is true. He was speaking to an ability possessed by the board for all time, not predicting the board's next decisions. One might also interpret his comment as a gentle critique of the alumni nomination process, which had produced (out of the last three alumni trustees) two outspokenly-conservative Catholic graduates of 1988 who attended the University of Virginia Law School and became law professors.
The new group is more diverse than the old, if it mattered. It does not. What matters is that the nomination of two and a half of its members was not controlled by corporate outsiders possessing their own agendas and subject to political forces. The five new trustees include two CEOs and a real estate mogul (categories previously unrepresented; incidentally, a corporate CEO is not in "finance"); a much smaller proportion of money manager/investment bankers than in the existing group; and another academic physician and another consultant.
Incidentally, finance people are not necessarily elected to nonprofit boards because they are "brilliant"; it is often because they are wealthy as well. This is the nonprofit's prerogative and has been exercised at the "storied" institutions of which you write for more than 125 years. It is frankly not the time to re-engineer the successful long-term leadership structures of "our formerly admired institutions" (what makes Dartmouth your institution?), and even if it were, it would not be your task. Unless you are appointed to the board.
I received a response to the comments by the second "anonymous" above, which makes the points better than I could.
===
The idea that the petition weren't "elected" by the alumni but rather by the board is an effort to pretend like there is a substantive point to be made there. Nonsense. The 1891 Agreement is clear that the alumni get to select half of the board. The board has never rejected a person elected by the alumni. If the board tried to do so, it almost certainly would lose because of the 1891 Agreement. Dartmouth made this argument in court last year in a motion to dismiss in the lawsuit and lost.
Everybody who has actually read the 1891 Agreement and the history surrounding it realizes this. Does this person really believe that the alumni at the time made their own commitments and promises and didn't request anything in exchange? After 25 years of demanding precisely this power?
The argument is like saying that the voters don't actually "elect" Congressmen because technically Congress has to decide whether or not to seat the person elected (see the debate over sitting the new Senator from Illinois). Does anyone seriously think that this means that it is Congress, not the voters, who "elect" members of Congress?
The charter trustees are self-perpetuating, in the sense that the board selects its own successors. Period.
The meetings are secret--which is exactly one of the problems. Public universities have open meetings and there is a lot of stuff that the board does that doesn't have to be secret.
In its filings in the lawsuit case last year, Dartmouth stated in its court filings that the 4 petition trustees voted against the board-packing plan. That is now public record.
Prior to the election of Todd Zywicki and Stephen Smith there were no full-time academics on the board. It hardly seems illogical for the alumni to vote to add two academics to the board of an academic institution and to consider that an expansion of diversity.
Stephen Smith is, to the best of anyone's knowledge, the first black person ever elected to the board by the alumni. All other minorities, it appears, were appointed as charter trustees.
Apparently there is a problem with having two graduates of the same law school. There are 7 graduates of Harvard Business School on the board (and 2 each from Stanford and Columbia business schools). One of the new charter trustees is a graduate of HBS. Two are graduates of Tuck School of business. Under this logic, there are already too many HBS grads and adding more HBS grads means that no diversity is being added. Presumably the board should be barred from adding any further graduates of Columbia or Stanford business schools.
The board itself said that the purpose of the expansion was to add "diversity" to the board. That's subject to different people's impressions, but few would agree with the assessment here that the new charter trustees are more "diverse" than the 8 alumni trustees taken as a group.
Finally, experts have come to agree that the solutions to the problems in non-profit governance are smaller board, more transparent governance, greater accountability, less control by hand-picked "executive committee" insiders, and detaching control of governance (board seats) from provision of financial resources. The Dartmouth board-packing plan stands for less-transparency (selection of more trustees is now placed in the hands of the board and in an even smaller group on the governance and nominating committee), the board is bigger and less accountable, more decisions will be controlled by a small group of insiders, and more seats are going to be sold to big donors.
Nor is it obvious why someone's religious beliefs should be relevant to their fitness to serve on a board of trustees. This is just bigotry masquerading as intellectual argument. Should the board count up how many Jews, Protestants, and atheists are on the board too and take that into account in deciding who to add as trustees? Has this commenter gone through and counted up the religious beliefs of everyone else on the board?
If being rich was the qualification for being on the Dartmouth Board then they may as well just auction the seats on eBay, which apparently would be just fine with your commenter.
In a world of Sarbanes-Oxley where we are demanding greater accountability and transparency in corporate governance, I simply do not understand the willingness of some people to engage in this sort of intellectual sophistry just to rationalize the irrational and defend the indefensible. This is nothing more than a naked power play to entrench the power of an elite and wealthy in-group and to turn Dartmouth into a country club for the rich and powerful. And the fact that there are apparently people out there who are willing to rationalize this power play just because they like the political outcomes demonstrates exactly what is wrong with the governance of higher education.
Even more, it is really scary that there are people out there who are willing to engage in this sort of incoherent and dishonest argumentation to rationalize results that they like. This person has obviously missed something important in their moral and intellectual education.
The third "anonymous" might know more than you do about this topic, Dr. Poses, but s/he does not know nearly enough to talk about it. S/he has not even read the documents s/he is claiming to refer to. My prescription: avoid this topic until further studies have been conducted.
-----
"The 1891 Agreement is clear that the alumni get to select half of the board."
No, it is not. The 1891 Agreement was never written down. The relevant writing of 1891 (a unilateral resolution by the board) gives certain alumni the privilege of nominating (not electing, appointing, or selecting) a specific number of alumni ("five") for the board to "elect." Whatever oral agreement might have existed did not change the rules of the charter that the board is bound to follow. The charter says the board elects all the elected trustees and writes its own bylaws.
"The board has never rejected a person elected by the alumni." This is a testament to the quality of a Dartmouth education, the wisdom of alumni in nominating good candidates, or the laziness of the board in failing to reject someone they disliked.
"If the board tried to do so, it almost certainly would lose because of the 1891 Agreement." It almost certainly would win. In fact, its rejection would succeed completely unless the alumni both sued and won. Neither is certain.
"Dartmouth made this argument in court last year in a motion to dismiss in the lawsuit and lost." Dartmouth did not. What it lost was its argument that, irrespective of the facts, the plaintiff hadn't even stated a claim that the court could find in its favor.
"Everybody who has actually read the 1891 Agreement and the history surrounding it realizes this." Please introduce me to someone who has actually read the 1891 Agreement. Even the plaintiffs in that lawsuit you refer to claimed that the Agreement was not to be found in any one document, and they omitted significant quotation from the 1891 resolution (even though it is not very long). This failure seemed to be strategic: the plaintiffs had no way to get around the resolution's unambiguous terms, so they had to try to argue that there was an oral agreement instead.
"Does this person really believe that the alumni at the time made their own commitments and promises and didn't request anything in exchange?" Of course. More importantly, the alumni declined to specify or write down whatever they gave in exchange, if anything. Legislatures restrict the enforcement unwritten contracts like this one precisely because courts will have no way of knowing whether the complaining party has complied with its obligation. No honest person would accept that the "payment" supposedly promised in 1891 is whatever some rabblerousers of 2008 now say it was. You don't have any idea what the alumni are supposed to have promised.
Therefore we know that they never intended this "agreement" to give them any legal rights. These people knew how to write, and yet they specifically chose not to write down their agreement or take any extra steps to indicate to us that they thought it should be enforceable. Feigned present-day outrage will not substitute for a real contract.
"The charter trustees are self-perpetuating, in the sense that the board selects its own successors."
No, the entire board in general is self-perpetuating, because the entire board elects its own successors except the two ex officio seats. The non-ex-officio trustees are called "elected trustees" for that reason. They are elected by the board. The nominees for those elections come from two different sources in proportions that have varied over time.
Although the board has never announced the vote tally, "Dartmouth stated in its court filings that the 4 petition trustees voted against the board-packing plan. That is now public record." So what? The board's votes are generally not announced.
"Stephen Smith is, to the best of anyone's knowledge, the first black person ever elected to the board by the alumni." No, he is the first black person elected to the board.
"The board itself said that the purpose of the expansion was to add 'diversity' to the board." You haven't got it quite right yet. The board said the purpose of making all the new seats charter trustees instead of half alumni trustees was to allow the board to add diversity if it wanted to, and, more importantly, to allow it to add particular individuals when it felt like it. It's the absence of alumni trustees that's the issue, not "diversity" or the board's supposed statements regarding "diversity." And you shouldn't forget that the board does not need to justify its decision to anyone – it put out the report to calm the controversy and build alumni support, but the quality of its explanations have no effect on the legitimacy of its resolutions.
"few would agree with the assessment here that the new charter trustees are more 'diverse' than the 8 alumni trustees taken as a group." This debate over diversity has little point because, at bottom, the board elects the board, a fact that neither the public nor alumni are permitted to change.
"This is just bigotry masquerading as intellectual argument." I mentioned religion to show the absence of diversity. You are the one basing your whole argument around anti-intellectual, populist bigotry against what you perceive to be "financial" people. You resent the upper class, perhaps. That's still bigotry.
"In a world of Sarbanes-Oxley [rest of paragraph deleted as not relevant to nonprofit corporations]"
"Even more, it is really scary that there are people out there who are willing to engage in this sort of incoherent and dishonest argumentation to rationalize results that they like."
Was my comment not coherent? Why don't you read your copy of the "1891 Agreement" and get back to me on how I could explain more clearly why you're wrong? What is dishonest about my argumentation? Can you be specific? Do you not think the articles of incorporation of any nonprofit are the first and best source of guidance on what it is permitted to do, and that those articles can't be changed at the whim of outsiders?
Maybe your real problem is that you think I'm trying "to rationalize results that" I like. I am not. I am trying to convince you of the facts. The most important fact is that nonprofits generally are authorized to elect their own board members. It's their problem if they make poor choices. You and other gadflies are free to whine about it if you like, but you need to recognize that you or Dartmouth alumni in this case have no right to direct the corporation or change the wording of its resolutions or articles of incorporation. You should not be suggesting that people try to change this corporation, even if you claim it is for the benefit of the institution.
First, I wanted to note that we allow anonymous comments mainly to protect the anonymity of whistle-blowers and others who challenge the powers that be in health care.
Please note that "anonymous 2" is defending the powers that be, at least at Dartmouth. Since he or she has nothing to fear from the current Dartmouth leadership, whom he or she is defending, one wonders why he or she chooses to remain anonymous.
Finally, please note that the quibbles raised by these anonymous comments do not address the main points made in my post.
These were first that Dartmouth College used to have a governance mechanism that was more transparent and acountable than that of many institutions of higher education (including many that include academic medical organizations). However, the board of Dartmouth changed its structure to apparently be less transparent and accountable. The rationale used by its chair was that by adding more members to be selected by the current board, rather than elected by the alumni, the board would be become more diverse. Instead, the board was packed with even more leaders of the financial sector (a sector that employs less than 6% of the employed population).
A board full of leaders of asset management, investment banking, private equity, venture capital, etc hardly seems diverse.
Why should the board of an educational (and partly academic medical) institution be dominated by a huge majority of leaders of finance? Is there any reason to think they are particularly devoted to the academic, and academic medical mission, or particularly expert in the issues arise when trying to fulfill that mission? The current financial meltdown, which mostly seems to be the result of arrogance and greed, if not corruption, among the leaders of finance, does not suggest an optimistic answer.
I wonder why Anonymous 3 did not even bother to post his comment here but emailed it directly to the moderator. I also wonder why he has not defended any of his claims or found a copy of the 1891 Agreement.
To address again the points raised in the post,
I. "that Dartmouth College used to have a governance mechanism that was more transparent and accountable than that of many institutions of higher education (including many that include academic medical organizations)."
You are presenting the inaccurate impression that a change of a significant scale and degree has taken place. Dartmouth's governance has never been particularly transparent or accountable. It is a private institution. Its only structural accountability is to the state, which has a right to have the governor made a trustee. The one change of note took place in 2003 when the state abandoned its right to approve charter amendments. You did not mention that change.
Before 2007, Dartmouth alumni enjoyed the privilege of nominating eight trustees for election to the board of eighteen. They still enjoy that privilege, although the board has grown to twenty-three by the addition of five more alumni. That is not a significant drop in accountability, since little or none existed before. There are now more alumni on the board than ever before, and the power of the state had shrunk as a consequence.
The board has become more transparent since 2007 by creating an alumni liaison committee, codifying its bylaws, and explaining some of its decisions in detailed public reports. It need not do any of these things, as it has no particular responsibility to be "transparent" to the public beyond following the laws of nonprofits.
II. "The rationale used by its chair was that by adding more members to be selected by the current board, rather than elected by the alumni, the board would be become more diverse."
That cannot be, since there are no trustees elected by alumni at Dartmouth. Among the other discrepancies in your account is the fact that the chair said the board could become more diverse, not that it would. The change would allow the board to better select its own members, permitting it to select those whom it believed it needed. One byproduct of this ability could be a greater diversity, but that was not the reason for the change, and it was not a promise to anyone or a standard to which the board asked to be held by the public at large.
III. "Why should the board of an educational (and partly academic medical) institution be dominated by a huge majority of leaders of finance?" Because it wants to, we can assume. Perhaps it is because it believes these people have more experience in management and philanthropy than most. Perhaps it believes these people will not disparage past trustees in public.
Six of 23 trustees are financiers, or ten if you count the real estate developer and three consultants. That is a minority, not a "huge majority." The five new trustees add only one investor to the five investors existing but expand by 33 to 66 percent the fields of consulting, medicine, and corporate leadership. The financiers have lost power in this expansion, not gained it. The expansion added a new field not yet represented, that of real estate development. Some of the current alumni trustees, nominated by alumni, were already in the financial field anyway.
Your biased suggestion that Dartmouth's trustees are among the "leaders of finance" whose "corruption" might have caused the current financial meltdown is just ignorant populism. If you are concerned for the medical school's finances, send it money, don't complain from your armchair. I have no prescription for your ills this time, except to avoid the topic of corporate governance until you understand it better.
I note that "anonymous 2nd" remains anonymous, even though he or she is defending the powers that be at Dartmouth, and ought to have nothing to fear from them.
In general, he or she continues to argue legal issues. For example, as "anonymous 3" pointed out above, saying that "no trustees are elected by alumni," amounts to, at best, quibbling.
Note that "anonymous 2" now admits that "Dartmouth's governance has never been particularly transparent or accountable," and implies that the board did not become more diverse.
In particular, it is telling that he or she now admits that the board simply makes decisions "because it wants to," but by implication not because those decisions would uphold some "standard" from "the public at large." Practically speaking, this may be true in a legal sense. The board may be able to do anything "it wants to."
But I submit that a board that never was very transparent or accountable, and that merely makes decisions because "it wants to" will be bad for the institution to whom it ethically (but perhaps not legally) owes stewardship.
Who would want to go, or send their child to an institution whose top leadership are opaque and unaccountable, and who merely act because they want to? Who would want to send money to top leadership who might do whatever they want to with it, feeling no need to be particularly transparent or accountable?
Finally, I note that the last paragraph from "anonymous 2" borders on an ad hominem attack (although carefully worded to say I have written "ignorant populism," not that I am an ignorant populist.)
So whether you see any more comments on this blog from "anonymous 2" depends on whether he or she crosses this line next time.
I have no interest in publishing my identity on your website. Both the Alumni Association and a secretive and nontransparent private foundation have sued the board over the questions you raise, and some of their supporters have been vituperative in their attacks on those calling for honesty and the legal status quo. One of their supporters even filed a brief with a New Hampshire court accusing the board of “pure thuggery,” another publicly compared the board to Hugo Chavez, and another sought special legislation from the state legislature to restrict Dartmouth’s existing authority.
I am still waiting for an apology from you regarding the ad hominem attack you published from an anonymous correspondent regarding my “dishonest” argumentation. I’m surprised you published it without verifying that the person had something to gain by manufacturing an “1891 agreement” (he does if he is an alumnus) and that he is pulling the wool over your eyes to do it, on your very own website. And what is there to salvage from your implication (nay, your entire argument, it seems) that Dartmouth’s trustees are of a dishonest class if not the very dishonest people themselves who might have created the financial meltdown? Do you think that the individual citizens you critique on your website are immune to ad hominem attacks by virtue of their election to Dartmouth’s board? Since you’re apparently so intent on applying government standards to private institutions, you won’t mind being accused of censorship for not publishing this comment.
You write above that “saying that "no trustees are elected by alumni," amounts to, at best, quibbling.” I dearly wish that you would tell that to the abovementioned groups who have sued the board of trustees in an attempts to acquire (they would say “to prove the existence of”) a right to elect trustees. This is not quibbling, this is the very foundation of the dispute.
What do you mean, “the institution to whom it ethically (but perhaps not legally) owes stewardship”? If you think a university’s board of visitors doesn’t owe legal stewardship, then I have to ask what business you have posting on topics like this, so obviously outside your area of competence.
“Practically speaking, this may be true in a legal sense.” I rest my case. And in what sense other than a legal sense do you think any of this matters? We’re talking about legal incorporations, legally-nonbinding agreements, legal obligations, and lawsuits. Are you seriously interested in some nonlegal aspect of this issue? Why, I wonder? I would be surprised if you find that line of inquiry profitable or even interesting.
I do not “now admit” that Dartmouth’s governance has never been particularly transparent or accountable. I pointed it out in my first comment of Jan. 12. Nor do I “admit” that the board makes decisions "because it wants to." This is what boards do. You must know that private corporations are generally neither transparent nor accountable to the public at large beyond what is legally required of them. I recommend you refrain from pretending you do not know the fundamental principles of the 21st-century corporation.
You are free to submit that the board “will be bad for the institution.” I challenge you to explain how the same board, at all times with less transparency and accountability than today, has successfully shepherded the institution since the eighteenth century.
“Who would want to go, or send their child to an institution whose top leadership are opaque and unaccountable, and who merely act because they want to?” Only the people who want their kids to go to Harvard, Yale, Princeton, Columbia, Penn, Brown, Dartmouth, and the other hundreds of private colleges with private boards that meet in secret and are required by neither whiners nor states to justify their legitimate decisions.
“Who would want to send money to top leadership who might do whatever they want to with it, feeling no need to be particularly transparent or accountable” beyond the requirements of state and federal laws and regulations? Only the people who collectively donate tens of billions every year. You might want to them to find out why they choose private over public schools.
Does HCR Blog stand by the ad hominem attack ("dishonest argumentation") of Anonymous 3 published by Dr. Poses? Does HCR Blog still stand by its erroneous factual statements regarding Dartmouth's governance controversy?
It's amazing how this issues (and a post from months ago) inspires emotion, if not exactly enlightenment.
Several anonymous commentators have expressed their opinions. They obviously disagree vehemently. One anonymous poster has challenged certain facts and the meaning of certain words. In particular, "anonymous 2" seems to deny that any Dartmouth alumni can actually elect any trustees. There seems to be an argument that they can. For example, in the NY Times article from June 21, 2006 on this bitter dispute,
"At Dartmouth, alumni elect half of the college's 18 trustees, either Alumni Association nominees of independent challengers."
http://www.nytimes.com/2006/06/21/education/21dartmouth.html
A quick perusal of my Dartmouth file revealed other media discussions of the Dartmouth case that again state that alumni effectively elect some members of the Dartmouth board. Yet "anonymous 2" wrote "no trustees are elected by alumni." Given that what "anonymous 2" wrote seems to be contradicted by at least multiple media discussions of the issue, and that "anonymous 2" has declined to provide an external reference for this statement, I am not sure why we should trust what he or she wrote more than any other opinion expressed.
So what "anonymous 2" complained about "erroneous factual statements" is quite arguable. At the moment, it appears that one "factual statement" about which "anonymous 2" insists may not be factual.
By the way, I do not personally vouch for the facts or opinions expressed by any anonymous commentators.
If I have personally gotten a fact wrong, I will be happy to correct it.
Meanwhile, driven by "anonymous 2," most of the many words of comments have not been to the points I made in the original post.
So I have let a number of anonymous commentators have their say. I don't see a point in having these arguments repeated any more.
I will consider allowing more comments to be posted if they say something original, especially relevant to my original post.
I hope I may clear up the confusion. It is true that there is an argument out there to the effect that Dartmouth alumni elect trustees directly. That argument was presented in a series of lawsuits that have so far not created the result the litigants seek and are not expected by informed observers to do so. One of those lawsuits was described incorrectly and was given improper weight by your correspondent.
It is easy to see why the quoted New York Times statement would be inaccurate, since it was written before the BOT expansion drew attention to the fact that nomination and election of trustees are two successive steps. The Times wrote that alumni "elect half of the college's 18 trustees" when in fact alumni nominated eight of the college's 18 trustees for election by the BOT. An alumni "nomination" normally is followed by a majority of the members of the BOT voting to "elect" that person, but that does not mean that the BOT or its individual members have ever been legally required to "elect" the nominee, as will be explained below. Alumni "influence" the elections and arguably "effectively select" some of the trustees, but they have never directly "elected" trustees or had a legal right to do so. Nor have they influenced the election of "half" or some other portion of the BOT, or had a right to exclude the BOT's own choices for those positions.
A nonprofit generally keeps the rights it was given in its articles of incorporation, even if it exercises them infrequently or makes decisions that please or benefit outside groups. It stands to reason that if the nonprofit is going to sell or give away any responsibilities that were given to it by the state, it should have to do so in writing and get its articles amended to reflect the change. In Dartmouth's case, until 2003, that meant getting state legislative approval for a charter amendment. Where the articles also empower the corporation to enact its own bylaws to govern its conduct, it also stands to reason that whatever bylaws the corporation validly enacts are entitled to more respect than some outside groups' frequently-changing and unabashedly folkloric interpretations of those bylaws.
Dartmouth's BOT was and is required by its charter to elect all 10 (now 21) of the elected trustees by majority vote. There were and are two ex-officio trustees who are not among the "elected trustees." The BOT took its nominees for election from within the BOT alone until 1876, when it amended its bylaws (its resolutions) to allow it to accept nominees from alumni. The BOT formally permitted the alumni to nominate five of the elected trustees in 1891 when it issued a resolution stating that alumni "may nominate a suitable person for election to each of the five trusteeships next becoming vacant." That resolution is quoted in the 2007 governance report. The BOT resolved to raise the number of alumni nominees to 7 in 1961 and 8 in 2003 when it expanded the BOT to 16 and 18 respectively.
The 2007 expansion from 18 to 21 in total was controversial because the 5 additional trustees are all charter trustees, nominated by the BOT, instead of being 50% alumni nominees, as had been the tradition dating all the way back to 1961.
The people who want to maintain the pre-2007 level of alumni influence on the BOT were required to make a somewhat convoluted argument in their lawsuits: (A) The 1891 agreement was not a one-sided grant of permission to nominate, as the language "may nominate" in the 1891 resolution suggests, but was an enforceable legal contract by which the BOT permanently sold certain charter election rights in return for particular compensation, (B) those election rights did not just involve the "five" seats, or the other numbers actually written by the BOT in its bylaws, but "half" of the elected trustees, thereby requiring the BOT to always expand in even-numbered increments, (C) the sale of seats in this manner was not illegal at the time and did not violate the charter, although it was not amended to allow such a sale and has never been amended to shift the election right from the BOT to alumni, and (D) this oral contract, which differs in important ways from all of the surviving documents, is still enforceable today. The oral contract was incorrectly described by your correspondent as something that could be "read."
It makes sense that your Dartmouth files would include media discussions stating that alumni effectively elect some board members. The existence of controversy, generalized reporting, and self-serving political announcements do not change the fact that no trustees are elected by alumni. This is the case because the elected trustees have always been elected by the BOT, the charter requires that it be this way, and the burden will always be on the complainers to show that the BOT could have sold off – and actually did sell off – that right (not just that the BOT regularly approves of the alumni nominees). The BOT itself says it never did any such thing. Common sense says that the people who supposedly bought and sold these rights in 1891 would have written down their contract if they'd intended it to ever be enforceable.
This is a third try at providing points relating to the original post:
1. The BOT is allowed to expand without explaining itself to the world.
2. The BOT nonetheless thoughtfully explained its last expansion in the 2007 report.
3. That report stated that the "skills, capabilities, and diversity" of the BOT are related to its size and that the addition of charter trustees will permit the BOT to expand or vary those characteristics in the future were it so to desire.
4. The expansion by the addition of charter trustees creates a permanent capability that will exist for decades or centuries, and the particular trustees elected last year cannot be taken to represent the exercise of that capability for all time. They are not the BOT's ultimate statement on "skills, capabilities, and diversity." They are simply five of the eight people the BOT wants to have for the next four to eight years. The four controversial trustees are still on the BOT and the existence of the eight alumni trustee seats is not affected by the expansion.
5. The five new trustees are in fact reasonably "diverse" in that they add new career backgrounds not present on the BOT and reduce the existing percentage of investment bankers, a category that was already a minority and did not dominate the BOT.
6. Commenters may dispute the opinion that the five new trustees are not "diverse." As presented by a relatively uninformed observer who appears to be aligned with the litigants and might harbor a bias against bankers, such an opinion may be criticized as unworthwhile, invalid, and lacking a basis in reality.
Post a Comment