Ruth Simmons, president of Brown University, quit the board of directors of Goldman Sachs, citing the “increasing time requirements associated with her position as President.” What she didn’t cite were the two or three weeks of steady criticism from financial analysts and students and the student newspaper in response to belated awareness of her lucrative remuneration from Goldman Sachs and her comments on her role on the board.
Simmons, who juggles membership on several boards, received $323,000 a year as a Goldman director and she leaves the board, which she joined a decade ago, with $4.2 million in Goldman stock, plus 10,000 options that could raise her take to $5.7 million.
In an interview with the Brown Daily Herald, Simmons, the only African-American on the Goldman board and one of only two women, stressed that as a director on several boards, her goal was “to make certain fields more accessible to women and minorities,” and implied that that she served on boards to learn something about economics.
The interview, which preceded the Simmons resignation, immediately drew strong criticism from Felix Salmon, a blogger at Thomson Reuters Corp. who called for a change in the composition of Goldman Sachs’s board because he said some of Simmons’s comments indicate that she lacks the business sophistication to challenge management.
He said: “In all the bellyaching about the governance of the biggest banks, and the fact that their boards were spectacularly unqualified to provide any kind of oversight of what they were doing, Goldman Sachs has gone largely unmentioned. But what’s true of Merrill Lynch and Bank of America is true of Goldman too: its executives need some kind of adult supervision, seeing as how they work for their shareholders, rather than just for themselves…. This interview with one Goldman board member, Ruth Simmons, hardly instills in me the confidence that she can or will understand what Goldman is doing, stop them from acting in a reckless manner, or keep a close eye on compensation as she wears her hat as a member of the compensation committee….”
Brown student Simon Liebling said he wrote in the Herald “to pile another column on her Goldman Sachs nightmare, writing about why serving simultaneously as a director on the board of the most infamous investment bank and as president of a university that keeps is investments secret from everyone might be something of an ethical problem.”
So far the broader issue of whether college president should serve on corporate boards hasn’t attracted much attention. Todd Zywicki, former member of Dartmouth’s board, wrote that serving on corporate boards is now seen as just another perks for presidents, particularly presidents of elite colleges and universities. He “wonders whether these close relationships between Wall Strreet and elite academia can actually be good for the academic mission in the long run.”
