The Record has a strangely titled update on the Morty/Marsh saga — a better name for which we still need. Although the title is “Schapiro speaks in defense of his role in Marsh & McLennan,” it isn’t obvious to me that this is descriptive of the author’s (Mark Hobel ’05) main point.

Anyway, there is a lot of good stuff here, but, alas again, the key questions are not pursued.

College administrators and college presidents in particular have long found a place for themselves on corporate boards, just as the men and women of the business world have long been academic trustees.

The reason that business folks are much more likely than, say, stay-at-home parents, to find themselves being college trustees is that college boards are filled with very rich people. You can like this or not like this, but it is the way of the world.

At the end of the article, Schapiro is quoted as saying, “”Academic leaders have served on corporate boards for decades.” It is not at all clear to me — in fact I do not think that it is true — that college administrators and presidents at places like Williams have “long found” positions as corporate directors. But this is an empirical question! Did Hank Payne, Frank Oakley or John Sawyer serve on the boards of any large corporations during his time as president? Have any of the Deans of the College over the last 20 years so served? (Alas, I can’t recall all the Deans of this time period, but Steve Fix and Peter Murphy come to mind.) I don’t think so. In fact, I think that a more true statement would be that “Morty Schapiro and Nancy Roseman are almost the only two senior College administrators to serve on the board of a large corporation in the last 25 years.” Or, depending on the spin that Hobel wanted to put on things, he could have written: “Breaking with long-standing Williams tradition, Schapiro and Roseman are the only members of the faculty to serve as corporate directors, earning over $100,000 annually for what they claim to be only a few days of work per year.”

Again, this would be putting a somewhat vicious view on things, but what’s the point of a college paper if not to come up with lines like this, at least once in a while?

When a firm is operating smoothly, the time commitment required of an independent director is modest;

“Modest” would certainly be the adjective that Schapiro and Roseman would prefer the Record to use. Hobel provides no citation for this claim. As we have documented, the time committement for a diligent director of a large company is 200 to 350 hours a year. (The higher figure would apply to someone who served as the financial expert on the audit committtee.) I don’t think that this is “modest,” but Hobel should at least provide a number, and a source, for his readers.

[A]ccording to Schapiro, the Marsh board generally meets “one day every other month,” in addition to “occasional one hour conference calls.”

But meetings are not the only time sink for diligent directors! The preparations required for board meetings, especially the background readings, are just as onerous, if not more so. This is like arguing that the time requirements for, say, ECON 357 are modest because there are only 12 hours worth of meetings per semester. In both cases, the real work — if you take your responsibilities seriously — comes outside of the meetings. Hobel should have asked Schapiro how many hours per year he spends on his board responsibilities.

He should also call up the the investor relationship department at Marsh and ask them how much time they expect directors to devote to their duties. You can bet that the answer will be more than 6 days per year.

Dean Roseman, who serves on the board of directors of the insurer St. Paul Travelers, travels to five meetings per year. She scoffs at the idea that her commitment to Travelers clashes with her commitment to Williams.

“Let me say right away that my work as Dean has never been compromised by being a member of a board,” Roseman said. “Ever.”

It is not my claim that outside board work necessarily detracts from work at Williams. Instead, I claim that being a director entails more than “modest involvement” in paid outside employment and is, therefore, not allowed according to the faculty handbook. Either the faculty handbook should be revised or Schapiro/Roseman should resign their positions.

By the way, did Roseman really “scoff?” If so, the follow up question should be, “Dean Roseman, according to proxy documents, you are paid around $150,000 for your services as a director at St. Paul Travellers. If you only spend 5 days per year on board business, could you explain to the Williams community precisely what you do that is worth $30,000 per day?”

Landing a president, dean or professor on a major corporate board has become something of a status symbol for academic institutions.

Again, the concern here is not with academic institutions in general but with place like Williams in particular. Hobel should tell us if the Presidents or College Deans of places like Amherst, Wesleyan, Swathermore, et al. serve on the boards of any major corporations. An easy place to start would be here. I don’t see Anthony Marx (President of Amherst) listed anywhere.

High-level business connections can boost prestige and reel in fat checks.

I doubt the prestige part of this. How many people knew about Schapiro and Roseman’s board service before? How can a secret boost the College’s prestige? If a College official is on a board and no one knows about it, is prestige increased? The issue of fund-raising is different and, vaguely plausible. Perhaps an exception to the “modest involvement” rule could be carved out for the President. But, has board service ever led to a fat check at Williams or at any place like Williams? A actual example for be nice.

When Schapiro’s name came up for shareholders’ election to the MMC board in May 2002, he and other influential members of the Williams community jumped at the opportunity.

I just love the “came up” phrasing here. The nice folks at MMC were just sitting around, happily rigging bids and front-running their own mutual funds, and, out of the blue, they realized that they needed a new director. Poof! Morty’s name just “came up.” Of course, what really happened, I’ll wager, is that Robert Erburu, chair of the committee that picks new directors, knew Morty from his USC affiliation, thought that he was a good and smart guy, and offered him the position.

If you hate “crony capitalism,” then you should be upset that this is the way that the world works. But work this way it does.

“Before allowing my name to go forward for election,” Schapiro said, “I spoke with members of the Williams Board of Trustees and with many of our prominent alumni, and every single person thought it would be great for the Williams president to serve on the board of the company.”

Translation: “I asked a bunch of rich Ephs who also serve on corporate boards. They were all eager to welcome me into the club.” Note the “every single person” claim. Again, I am certain that Morty is telling the truth here, but it still seems a sleazy business. You can bet that there are many “influential members of the Williams community,” like a big chunk of the faculty, who wouldn’t describe this as “great”. If the Record tried harder, I am sure that it come up with some great quotes, anonymous or otherwise. Hobel should give a call to Professor Shanks.

Roseman met with a similar reaction when Robert Lipp ’60, Williams trustee and chairman of St. Paul Travelers, nominated her for a position on his board in 2002. According to Roseman, Schapiro “expressed excitement” at Lipp’s offer.

The wonder of crony capitalism again. Of course, there is no easy way for a fellow like Lipp ’60 to go about picking new directors. It is reasonable and common for a chairman like him to meet a highly competent academic adminstrator like Roseman and decide that she would be an able board member. But no one should confuse this process with a “market” in executive talent. See Jerry Useem ’93 for related thoughts.

Schapiro declined to comment on the size of his MMC compensation

Why can’t Hobel look up the actual number? One of the many wonders of the SEC is that it requires that all this information be made public. Schapiro’s (and Roseman’s) compensation for board service is a matter of the public record. Interested readers can find the key information in the proxy statements for Marsh (see page 11) and St. Paul (see page 8). Summary: Roseman’s deal seems slightly better, but both packages are over $100k, perhaps substantially so (consistent with the range that Hobel presents based on company size).

The article ends with some good commentary from (untenured) Economics Professor William Gentry.

Overall, the article is a fine contribution to the story and well worth a read. Perhaps I am expecting too much from the Record in my critique . . .

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