In Penn’s leadership meltdown, the board was too big and slow, expert says

The way University of Pennsylvania’s board handled complaints against former president Liz Magill, and her departure, shows the board is far too large to function effectively and is ripe for reform, says Charles Elson, a consultant to corporate and nonprofit boards and a veteran governance scholar at the University of Delaware.

With 61 voting seats for trustees — even with a dozen of them vacant, which Penn officials declined to explain — the board is way too big, hard to manage, and slow to respond, Elson says.

“Imagine if it was a company and your major lenders and investors came to you to say they are concerned about your leadership and you need to make a change. Would any rational board tell them to go stuff it?” he asked. “You have to respond. Or they will cut off your money. When donors come forward, it’s very important to listen to them.”

In October, the Penn board initially sent out a hollow message through chairman Scott Bok that members were “unanimous” in supporting Magill in the face of billionaire alumni complaints that her administration wasn’t dealing effectively with antisemitic expressions by faculty, staff, and visitors. Seven weeks later, after Magill’s much-criticized performance in a congressional hearing, the board stood aside while both Magill and Bok resigned.

New chair Ramanan Raghavendran has pledged to return “the focus to Penn’s academic mission” and ensure “a safe campus” featuring “civil discourse.”

“The board woke up!” Elson said. “They’re not just lying there like parsley on the dinner plate anymore.”

Magill’s departure and the subsequent resignation of Harvard president Claudine Gay alarmed faculty members, who worry donors will move more confidently now against professors with opinions they don’t like.

Indeed, Elson said this moment could mark a new period for leaders of well-funded universities, who have long operated with a strong measure of job security from outside criticism.

He contrasted the recent Ivy League presidential topplings with the business-led 2012 boardroom coup against the state-controlled University of Virginia’s president Teresa Sullivan, who was reinstated when faculty, administrators, and Gov. Bob McDonnell rallied to her side.

Here, Pennsylvania Gov. Josh Shapiro added to the pressure on Magill. Penn professors have demanded not for Magill’s reinstatement as president (she remains a law school professor), but rather their own protection from encroachment on faculties’ self-regulating power by assertive trustees.

Magill’s departure doesn’t end the problem, according to one of her most insistent and effective critics, Marc Rowan, billionaire head of private equity giant Apollo Global Management and chair of Penn’s Wharton School advisory board, who inspired a Penn donors’ boycott. Trustees need to review their governing board’s size, priorities, and composition, or Magill’s successor is likely to fail as well, he warned in a note to trustees after the resignations.

“The sheer size of it is huge. You can’t run an effective board with that many people,” Elson said.

At Penn as at other schools with large boards, an executive committee of senior trustees handles business between a few whole-board meetings each year.

That’s a risky approach, Elson said. “Legally, all the trustees are still responsible, with the same fiduciary duties [to do what’s best for the school]. You either have a real board with power, or you have an advisory board that is consulted. This board is way too big. Ten or 15 members is about right.”

Penn trustees who are active on outside corporate boards, speaking on condition they not be named because they were not authorized to speak publicly, said they had urged Bok to do what corporate boards do in times of crisis: meet daily, take forceful actions, and communicate frequently.

That’s the approach Rowan took in last fall’s critical campaign against Magill. He was effective at generating thousands of protest letters from Penn alumni, plus pledges to stop funding Penn.

It is a board chair’s job “to build consensus,” Elson said. “Anytime constituencies raise serious issues, you have to react to it quickly and appropriately. You cannot be rash. But you have to react.”

Full consensus often eludes a board with dozens of members, Elson said.

“To say that we ‘unanimously’ support our president in all circumstances is very foolish,” he said. “People on boards that large know they are never unanimous. So when you claim it is, you are suggesting that you are there to support whoever is president, and not the institution. And facts will almost always come out after such a statement. It’s a bad idea.”

Rowan has called on Penn to review, among other things, the composition of the board, and how the members are selected.

Under current board rules, the voting Penn board members include 28 “term” trustees, who serve up to two terms of five years each; 14 “charter” trustees, who serve for life, or until retirement; 14 alumni trustees, who are mostly not directly elected by alumni, as at Penn State and some other schools, but who hold positions in Penn’s General Alumni Society; four appointed by the Pennsylvania General Assembly; and the university president. Pennsylvania’s governor gets a nonvoting seat.

Besides shrinking to a fraction of the current size, how might the board be reorganized? “It’s tough,” said Elson. “The only way you can force change at a nonprofit that doesn’t want to change is a lawsuit by the attorney general for the state.”

Elson suggests set terms — eight to 12 years — so members can “develop institutional sophistication” but not get “stale.”

“You can’t operate a board with 60 members,” he said. “You do it because a large board raises money. But the board’s role isn’t to raise money. It’s to oversee the university in its proper role.”