Board of Trustees

Penn State trustees chairman: Governance reforms ‘responsible stewardship’

Penn State’s trustees are on the verge of adopting “dramatic” and “significant” changes to the way the university governs itself, and the board’s chairman called the progress “responsible stewardship.”

The board of trustees’ governance and long-range planning committee gave its official endorsement of reforms, such as removing the voting powers from the university president and state governor and widening a policy about what constitutes conflicts of interest. The reforms have been part of the discussions for months, and now with the OK, they will move to the full board Friday for approval.

In an interview after the committee meeting, the board chairman, Keith Masser, said the process to review scores of recommendations from various groups was a “greater sense of introspection.”

“We’re all elected to be stewards of this university,” he said.

The reforms stem from scores of recommendations from various agencies and officials, such as the report from Jack Wagner, the state’s former auditor general.

The most aggressive proposed reform is the removal of the president’s and governor’s voting powers, a move that will reduce the size of the board to 30 who can vote. The president and governor will be ex-officio members, meaning they have membership by virtue of their position. Gov. Tom Corbett has said he supports the proposal.

“I think it’s critical that we recognize that we are moving ahead with significant change today,” trustee Keith Eckel said Thursday during the meeting.

“This isn’t once and done. There will be consistent work at improving our governance.”

The reform package also calls for increasing the number of trustees at a meeting to have a quorum — 16, up from 13 — and increasing the time a former university employee has to wait before being eligible for board membership, which would be increased from three years to five years.

The board also is proposing to add language to its bylaws that allow a trustee to be removed from office if the person breaches his or her fiduciary duty. Officials said Thursday that removing a trustee has always been allowed because nonprofit corporation law allows for the removal of a director from a board.

In addition, the university’s vice president for administration, Tom Poole, has been recommended to be the secretary of the board. That had been the president’s job, and the Wagner report called for giving the duties to someone else because the president had too much power.

The trustees are also proposing broad changes to the conflict of interest policy that requires potential issues to be disclosed before the board votes on a contract or transaction with a trustee, or a person or company associated with a trustee. The policy has always applied to situations where the trustee has at least a 10 percent interest in a company or the contract involved is more than $10,000, said Paula Ammerman, the director of the trustees’ office.

But, Frank Guadagnino, the university’s outside counsel, said the policy only pertained to possible financial conflicts. Now, the proposal applies to just about anything that could cause someone to think a conflict applies, such as an employment conflict or a family conflict, he said.

The conflict of interest policy also spells out that trustees that are not eligible to work at Penn State until five years passes since he or she would have left the board.

The board can make an exception as needed, such as an emergency and something happens to a university officer, Guadagnino said.

That reform proposal was not in place when the board appointed fellow trustee Dave Joyner as the athletic director in November 2011, after then-athletic director Tim Curley was indicted on perjury charges and put on administrative leave.

Alumni have been critical that the board’s rules at the time permitted that change in leadership, a decision that Guadagnino acknowledged Thursday after the meeting. “Not in theory so much,” he said referring to the policy, “as a lot of people are objecting to the particular person.”

Earlier, during the meeting, trustee Joel Myers asked Guadagnino how the proposed reforms compared with previous changes in the history of the university.

“This is the most comprehensive review and change to the organization’s documents I’ve found in the historical record,” he said.

Masser said he recently attended a conference on higher education, and he came away with the feeling that Penn State is seen as a model for governance and compliance initiatives.

James Broadhurst, the chairman of the governance committee, responded: “Whether we want to or not, we may became the standard in higher education.”

In other matters Thursday:

The trustees are warming to having Penn State email addresses that would be made publicly available, Masser said.

The trustees appear to be interested in researching whether trustees or directors at other universities have to comply with background checks. The trustees seemed interested in applying that to the people who seek election to the board, too.