Board of Trustees

Penn State trustees approve governance reforms, but not without dissension

Penn State’s board of trustees ushered in a new period in the university’s history Friday as all but one of its members supported a slew of governance reforms that include a small reduction in the size of the board, broadening a conflict of interest policy and setting term limits.

The reforms had been up for discussion for months, as they have been brought to the board by outsiders such as the former auditor general Jack Wagner, and an internal group, such as the University Faculty Senate. On Thursday, the board’s governance committee forwarded the reform package for a vote Friday by all of the members.

“In one fell swoop, it’s probably the biggest change to the bylaws that we’ve made in 100 years,” trustee Joel Myers said. “Many institutions don’t make this change at all, certainly over decades.”

The vote was not unanimous, as Anthony Lubrano, the freshman trustee who has been a vocal critic of his fellow trustees and their decisions, opposed it. He said he thinks some changes — such as a new policy that spells out the power to remove a trustee who violates his or her fiduciary duty — are aimed squarely at him.

He also criticized the extent of the reforms, saying they were akin to taking “baby steps.”

Among the reforms are setting a five-year waiting before a university employee or state row officer can become a trustee. Likewise, a trustee has to wait five years after his or her departure from the board before being eligible to work at the university, although the board an exempt that policy if it chooses.

With the removal of the president’s and governor’s voting powers, the size of the board stands at 30 members. The reforms also raise the attendance required for a quorum, from 13 to 16 trustees.

The reforms also extend term limits so that it doesn’t matter if a trustee is elected or appointed. Effective July 1, all trustees are subject to a maximum 12 consecutive years on the board.

The expanded conflict of interest policy covers more than just financial matters, such as employment relationships or family members. In addition, a trustee involved in a potential transaction with the university would have to leave the room during any discussion or vote.

Trustee James Broadhurst, who as the chairman of the governance committee oversaw the discussions, said the reforms would continue as a work in progress.

The board’s vice chairwoman, outgoing trustee Stephanie Deviney, addressed what she called a “perception problem” with the proposal about the five-year waiting period for employees before being eligible for trustee membership. The previous rule had been a three-year waiting period.

Deviney said that was one of Wagner’s recommendations and is not aimed at anyone in particular. On Thursday, Jay Paterno, the son of the late football coach Joe Paterno, wrote a sarcastic message on Twitter that he took the change to be a way of keeping him from getting on the board.

Lubrano took issue with the trustee removal policy, saying that the policy does not define a breach of fiduciary duty.

But general counsel Steve Dunham said a trustee’s fiduciary duty is defined by law and was adamant that the policy was not directed at him. On Thursday, during the board’s governance committee, officials said the policy had always existed but wasn’t written out — nonprofit corporation law allows for the removal of a director.

Earlier in the meeting, the outspoken letterman Franco Harris, warned the trustees about the policy.

“If you remove one single member voted in by the alumni, you ain’t seen nothing yet,” he said during the public-comment period.