- University of Minnesota President Joan Gabel is leaving the board of directors of Securian Financial after several weeks of mounting concerns that her dual positions raised ethical questions and invited conflicts of interest.
- One of the company’s affiliates, Minnesota Life, has a $4.6 million contract with the university. Gabel’s corporate board position also came with compensation of $130,000 per year, although the president said she waived that pay. She makes about $1 million per year as university president, including benefits and bonuses.
- “Out of respect for the institution and to eliminate any further distraction of our work, with a heavy heart, I will be resigning my Securian Financial directorship effective immediately,” Gabel wrote in a Jan. 23 letter to the chair and vice chair of the university’s governing board.
Higher ed leaders frequently find themselves navigating a thorny set of issues if they serve or seek to serve on for-profit companies’ boards.
College presidents are expected to act in the best interest of the institutions they lead. And they have at least some authority over many of the purchasing decisions their institutions make. But corporate board members are charged with fiduciary responsibility to a company, meaning they must prioritize the interests of stockholders.
That sets up the potential for one leader holding two roles to be faced with clashing priorities. And there is no shortage of potential clashes for executives at sprawling research universities, which regularly sign large contracts with vendors, navigate corporate giving and sponsorships, push for scientific discoveries, and aggressively protect intellectual property rights.
Even the appearance that a leader faces a conflict of interest — or did not disclose corporate ties — can draw harsh scrutiny.
Presidents who hold corporate board seats have for decades defended the practice as helping the colleges they lead gain visibility, tap new fundraising connections and better understand the fast-changing needs of the economy and job markets. Some parry concerns about high remuneration for corporate board members by saying they aren’t primarily motivated by the finances.
Former University of Maryland, Baltimore County President Freeman Hrabowski told The Washington Post in 1996 that if he was motivated by money, “I’d go to corporate America … because I could make much more money, quite frankly.”
At the time, Hrabowski served on four boards paying him as much as $72,000 total in a year. He drew $148,300 in salary as a university president that year.
Typically, colleges and universities have conflict-of-interest policies, and their governing boards sign off on administrators holding outside board memberships.
University of Minnesota regents approved Gabel to sit on the Securian Financial board of directors in December, provided she recused herself from Securian-related matters, they said in a statement. The regents tried to balance the president’s responsibility to the university with the professional benefits Gabel would receive from serving on the board, they said.
But their vote was not unanimous — nine voted for the arrangement, while three voted against it. Some worried that it would impinge on the president’s fiduciary duty to the university, The Minnesota Daily reported.
In the weeks that followed, a state senator asked the president to step down from the Securian board because of conflict-of-interest concerns, the publication reported. A regent asked the board to hold a special meeting to reconsider the president’s corporate board position, alleging that state law prevents officials who are part of contracting decisions from taking money from companies.
The last several weeks have been “extremely painful” amid questions over the board seat, Gabel wrote to regents. She said she voluntarily waived directors’ compensation from the company and didn’t receive any benefits from it.
Gabel’s spot on the Securian Financial board would expand “important networks and outreach” for the university, she argued.
“I have previously been persistent on seeing this board appointment through because we faithfully followed the University’s policies, negotiated appropriate contract terms, and had full public approval that put the institution first,” Gabel wrote.
“Moreover, this type of appointment is anticipated in my contract; the University is protected by the current Conflict Management Plan which provides strong guardrails to avoid any potential conflict; most of my fellow presidents and chancellors are directors on for-profit and not-for-profit boards, including many on boards of companies with whom their universities do business; and Securian Financial is an outstanding company and it would be an honor to serve,” she wrote.
The regents welcomed the resignation in their statement as “a decision that serves the public interest and reaffirms the President’s unwavering commitment to advance the mission of the University of Minnesota.”