Ben Bernstein ’09: Why the Corporation matters and how they get paid

By
Monday, March 16, 2009

Correction appended.

It was a pretentious gathering, even for Brown – the kind of “panel discussion” where each speaker is allotted five minutes but takes 15 to 20 due to excessive hand gestures and elongated syllables. The prahhhh-cess by which we ooorrrr-ganize the diiiiiscipline is viiii-tally important.

With a title like “Scholarship in a Time of War: Universities, Associations and the Responsibilities of Citizenship,” maybe I was asking for trouble, but I’d like to think that there was potential for some enlightenment. Instead, I received further confirmation that all Brown roads lead to the third floor of University Hall.

Perhaps the most interesting panel member was Norm Hebert, director of the office of sponsored projects, who spoke about research funding at Brown. After emphasizing his role as “an administrator not a scholar,” Hebert went through a list of past research sponsorships that his office had considered (without mentioning whether or not they were accepted), including a white supremacist organization and the American tobacco industry.

When I asked Hebert how he decided which sponsors to accept, his superior, Vice President for Research Clyde Briant, explained that the office simply followed the guidelines laid out by the Corporation. But of course.

I don’t have a bone to pick with the Corporation. The only reason I keep bringing them up is that they run this school and so I think it’s worth our efforts to understand them as best as possible.

In a recent Herald column, a student who clearly doesn’t understand the Corporation wrote, “Corporation members are not paid for their efforts but attempt to maintain and improve this University of ours. They act as students’ advocates and, unlike other members of the community, can govern equitably because they don’t have any financial interest in the University” (“A defense of the Corporation,” Feb. 23).

I think that such an attitude is a common one among Brown students. After all, it seems to be true. There is no monetary salary for Corporation members. They don’t seem to have any financial interest in University actions. But of course, as I’m sure any of the billionaire members would tell you, nothing in this world is free.

The first and most concrete way that Corporation members are compensated is through admission of their children. Finding Corporation members with children who were accepted at Brown isn’t exactly “Where’s Waldo?” Call it correlation and not causation if you want, but the link is undeniable. Of course, Corporation kids aren’t the only ones who benefit from parental connections – I was admitted in part because my dad is a Brown graduate.

Still, regardless of whether or not their children merited admission – and indeed what it means to “merit” admission is highly contentious – these students faced a lower level of scrutiny in their admission process than students whose parents were not directly deciding how Brown spends its money.

The second and more beneficial way that Corporation members are paid is through social networking. In what other situation are such a diverse range of wealthy and powerful people in fields such as finance, medicine, law and government gathered into one room?

Members often sit on other boards such as Goldman Sachs (President Simmons) and one has a side gig with the U.S. Treasury Department (Steven Rattner). U.S. Securities and Exchange Commission Commissioner Annette Nazareth works alongside financial figures she may one day investigate.

Want truly dizzying connections? Brown Corporation member and Princeton sociology professor Marta Tienda is on the board of the Jacobs Foundation, the RAND Corporation, the Alfred P. Sloan foundation, TIAA and the Princeton Healthcare System.

The main point is that Corporation membership gives one access to power and influence in an incredible range of areas, many of which overlap, and those kinds of connections have legitimate and enormous value outside of Corporation meetings.

The most salient aspect of the Corporation’s unofficial salary – from relaxed admissions standards for their children to networking benefits – is that students aren’t the ones paying it. The result is that the Corporation does not answer to the students it is supposed to serve.

Which brings us to the other part of the earlier quotation: The Corporation as “students’ advocates” – that is, a group of altruists looking out for students’ best interests. Conceivably, if the Corporation does not answer to students, it might act in its own interests instead of ours.

A particularly relevant case involving self-interest and future Brown trustees occurred less than two years ago.

In late May 2007, billionaires Steven A. Cohen and Barry Rosenstein, both managers of successful financial firms, teamed up to write a letter to online brokerage TD Ameritrade advising them to combine with either Charles Schwab or E*Trade. The letter accused members of that company’s board of acting against the combination – and thus against stockholder interests – in order to maintain their influence on board decisions.

In a second letter written a few weeks later, Cohen and Rosenstein insisted that leaders of Toronto Dominion, the “TD” of TD Ameritrade, were blocking a combination which “could diminish Toronto-Dominion’s ownership stake,” effectively placing their own interests above those of the shareholders.

At the time, one observer called the letter “a shot across the bow at the directors, saying, you better pay attention to everybody, not just the one who put you on board.”

Pay attention to everybody? Not just the ones you put on the board? Sound familiar?

Almost exactly one year later, Cohen and Rosenstein were named Corporation members where they, along with other members, have ignored calls for student representation on the Corporation or community approval of any of its decisions.

If the Corporation doesn’t answer financially to the student body, why wouldn’t they act like the TD Ameritrade board members that Cohen and Rosenstein were criticizing and act primarily in their own interests? Why are Cohen and Rosenstein worried about damaging self-interest on TD Ameritrade’s board but not on the Brown Corporation?

Their letter concludes with a telling line: “We believe that the light of day is a powerful asset for shareholders and we welcome the Board’s opening of a public discussion of these matters.”

Cohen and Rosenstein should share such wisdom with their fellow trustees. Advocate for students by letting us advocate for ourselves. Permit students to sit on the Corporation.

Former Herald Opinions Editor Ben Bernstein ’09 is a history concentrator from St. Louis, Missouri.

An opinions column in last Tuesday’s Herald (“Why the Corporation matters and how they get paid,” March 10) incorrectly identified Annette Nazareth as the U.S. Securities and Exchange Commission Commissioner. Nazareth stepped down from her position as commissioner in Jan. 2008.