Board Research

Board Governance Research
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  Understanding Governance Trends in American Universities: Results of a Study of Members of the  Association of American Universities  Abby Arbutina Lindsey Colven Kevin Jolly Eli Kariv Brock Klinger Danielle Robertson Executive Summary Through scholarly research, we have created a tool for analyzing the composition of governing boards in terms of their transparency and structure. We collected information from the governing documents included on the websites of 52 member universities of the Association of American Universities. Drawing from literature written by doctors Richard Chait and John Carver, personal testimony from Donald Hambrick, and the 2012 Corporate Board Index compiled by Spencer Stuart Inc., we established criteria to rate their governance practices. Empirical evidence from constitutions, bylaws, and charters were categorized as either a corporate-like structural component of the governing board or a disclosure component which we call transparency. These groups were used as axes to plot university board composition on a matrix measuring their performance on these axes. We have also provided background on the literature, interviews, Corporate Board Index, and the foundations of our board matrix.  The Matrix: How Corporate is Your Board The matrix depicts a snapshot of university governance within the Association of American universities*. It plots their performance on two main axes: transparency and structure. The matrix is broken down into four quadrants, they include, La-La Land, Spec-Ops, Independent Study, and Corporate Land. Each quadrant represents a different combination of structure and transparency, which gives insight to different university styles of governance, composition, policies, and governmental compliance. In no way does this research attempt to favor one quadrant, or prove one is more effective than another. It does, however, identify those universities that have instituted policies and structures to more efficiently transmit their actions to the public sphere and match their format to those of public corporations. The Criteria All possible points and weights are based on trends seen in corporate boards today. The transparency criteria were chosen using Spencer Stuart’s 2012  Corporate Board Index while the structure criteria came from our own research on observable trends in corporate governance. A criterion may be worth 1, .5 , or .25 points. Higher weights imply a stronger trend among corporate boards. One point denotes at least 70% of boards exhibit that criteria. One-half point and one-quarter point minimums were determined on a case-by-case basis, but were always based on characteristics that less than 70% of boards exhibit. See Appendix I for the individual criteria. La-La Land When a university scores less than half the points available in both categories of transparency and structure, it lands in La-La-Land. The three most notable universities in this quadrant are NYU, Carnegie Mellon, and Princeton. All three are private universities, and may not have to comply with governmental disclosure like most public universities. The most common reasons for universities ending up in La-La Land are a lack of mandatory retirement policies, explicitly stated mandate for annual assessment of the university’s president, and oversized boards  on the structure axis and lack of lack of access to the university charter and failure to host public meetings from the transparency aspect. Spec-Ops This quadrant is the least populated with only 5 of the 52 universities landing here. To be considered Spec-ops the university scored more than half the points possible for structure, and less than half the points possible for transparency. These universities shared similar structure to corporate boards, but showed very little  transparency. 100% of the universities that land in this quadrant are private. While they structure their boards in a corporate manner, they still may not have to comply to certain disclose laws within their state, being that they are private universities. Independent Study The independent study quadrant is the most heavily populated. 19 out of the 52 universities land in this quadrant. 12 are public institutions, and 7 are private. Landing here shows that a university scored more than half the points possible for the transparency section, and less than half the points possible for structure; essentially showing these boards have very similar transparency traits to corporate boards, but structure themselves in a wide array of ways. No patterns exist in this quadrant for structure; results for number of members, committees, and types of committees vary considerably. Because the majority of the schools in this quadrant are public institutions, they may experience higher transparency scores because of governmental disclosure policies. Corporate Land Universities landing in corporate land scored more than half the points possible for both transparency and structure. These boards are most closely related to the governing boards of US public companies. 13 of 52 universities land in Corporate Land. Though no one school stood out as a clear top-performer, Duke took the top spot in terms of structure while the University of Minnesota stood out as having both highly corporate structure and a high degree of transparency. * - The Association of American Universities had 62 members at the time of this writing. We complied data for the governing bodies of all member universities. As some universities share governing bodies, certain schools were consolidated under their common board. Spencer Stuart as a Source of Criteria Spencer Stuart was founded in 1956. It is one of the leading executive search firms in the world, and has access to many of the leading executives. It provides guidance and counsel for some of the largest companies in the world, as well as medium-sized companies, and smaller entrepreneurial ventures, and its more than 300 consultants are supported by premier researchers. The focus of our research is on the Board and Governance Category, specifically the Spencer Stuart US Board Index 2012.   Spencer Stuart Board Index 2012  The Spencer Stuart Board Index is an annual study, which examines the state of corporate governance among S&P 500 companies. According to the index, 73% of S&P 500 boards had 9-12 members on their boards, 13% had eight or fewer, and 14% had thirteen or more. Therefore, there was 1 point allotted for a board with 9-12 members, and 0.5 points were allotted for a board with 7- 14 members to allow for some variance. Next, the index shows that the average number of meetings per year of a corporate board in 2012 was 8.3 times. It is shown that 51% of boards met 6-9 times per year, and that 20% met 5 times or fewer. When added together, it is found that 71% of boards met 1-9 times per year, so 1 point is allotted for boards that had a number of meetings within this range.
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