University News

Simmons’ resignation at Goldman still a puzzle

By
Sunday, May 30, 2010

For almost 10 years, President Ruth Simmons’ service on the board of Goldman Sachs Group was very much under the radar.

Then, this past winter, as the world was waiting to see what CEO Lloyd Blankfein would take home after a tremendous $68 million bonus in 2007, a handful of students and bloggers began to realize that Brown’s own president was one of a group of just 10 directors who had the responsibility to set executive pay, as well as to oversee practices for which the firm has come under such scrutiny in recent months.

When I interviewed Simmons for a Herald article in early February, she said her ties to the Wall Street giant would not harm the University’s image. She joined Goldman’s board in 2000 while serving as president of Smith College, and said her position on the board had given her a certain economic savvy that helped her do her full-time job at Brown better. She also spoke about the importance of sticking to commitments. People have an obligation, she said, to “do the best we can and do it ethically, but not to be buffeted about.”

A few days after the interview was published ­–– and still a few months before the SEC suit and the Congressional hearings — I was surprised to read a Goldman press release stating that Simmons would not stand for re-election as a director due to “increasing time requirements associated with her position as President of Brown University” — the same reason she gave for stepping down from Pfizer in 2007. I nervously sent off an e-mail to Simmons, worried I had misrepresented her views. Less than an hour later, I received a reply in which she explained that she had made her decision a few days after our interview. She stood by what she had told me. She assured me it had been a complicated decision that involved factors she was not yet at liberty to talk about.

A few weeks after the press release announced the end of Simmons’ tenure at Goldman, the issue was thrust into the national spotlight when the New York Times ran a feature by Graham Bowley on the front page of the business section about Brown’s “bogeyman of Wall Street” (whatever image that was supposed to conjure of Simmons) that portrayed a campus in uproar. I had met with Bowley in The Herald’s office about a week before his story ran, when he spent a day on campus trying to make sense of the ordeal, asking the question that was surely on the minds of many shareholders: What was spurring Simmons to leave? But administrators, and Simmons herself, refused to speak to Bowley, and the only student quoted was a Herald columnist who had railed against Simmons’ Goldman ties in several of his columns. Despite the article’s portrayal of Brown, there had not been rallies, petitions or mass movements. Readers of the Times read about a controversy that never really existed to such a great degree. But the article prompted a rash of blog posts about Simmons’ position on Goldman’s board nonetheless.

On May 7, Goldman held its annual shareholder meeting, and Simmons did not run for re-election, finally washing her hands of the mess.

As a Goldman director for all but a year of its life as a public company, Simmons had a hand in all of its dealings, if nothing more than her silent consent. The extent to which Simmons played a role in overseeing the practices that have come under scrutiny from lawmakers is still unknown — and indeed, her positions may not have been reflected in the ultimate choices made by a board with 10 directors. We can hope that in the months and years after she distances herself from Goldman, she will be more open to discussing her role in leading the company.

How much we care about her work on Goldman’s board will depend on the verdict of history regarding Goldman’s role in the financial crisis. With heightened national attention, much of left-leaning Brown is turning more strongly against Goldman, even while others, in turn, deride the Congressional hearings as a political stunt to bring about more regulation.
Depending on how things plays out, Simmons’ tenure may be cast either in a light of righteous opposition to corporate greed or of ordinary service on a corporate board, an activity common for today’s college presidents. But there is also the potential — as some on campus have argued — that Simmons’ term at Brown will someday be seen to represent the corporatization of higher education, a time when an Ivy League president either contributed to the corporate malfeasance that led the country into crisis, or else sat idly by and watched it happen.