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President Ruth Simmons said in an interview last week that she does not expect negative publicity about the practices of Goldman Sachs, whose Board of Directors she serves on, to carry over to the University's image.

Simmons joined the board in 2000 while president of Smith College. The New York–based financial services company Goldman Sachs has suffered harsh criticism since early in the current financial crisis for doling out high bonuses to its executives after receiving money from the federal bailout program. All 10 of the company's directors serve on its compensation committee, which is responsible for determining and approving the compensation for the company's CEO and executives, according to the committee's charter.

The debate over Goldman's practices is to be expected, Simmons said, but she declined to make a public statement on the company's past actions.

"There are lots of things in a complex institution that go on," she said. "You're not in charge of everything that your friends do and every policy that organizations that you're affiliated with issue."

In a statement on its compensation policies released in December, Goldman stated that its compensation policy, which emphasizes performance-based bonuses, is "designed to attract and retain the most talented human capital, which has been a key contributor to generating excess returns relative to peers."

But to the surprise of many analysts, Goldman announced on Friday that the bonus received by CEO Lloyd Blankfein will be only $9 million this year and will be delivered entirely in stock. Blankfein's largest bonus, of $67.9 million, came in 2007. Newspapers such as the Times of London had reported suspicions of a bonus as high as even $100 million this year.

In January, Chairman of the Financial Crisis Inquiry Commission Rep. Phil Angelides, D-Calif., criticized Goldman's practices during the months leading up to the financial crisis of selling debt products tied to mortgages it knew were declining in value. He compared the practice to "selling a car with faulty brakes and then buying an insurance policy on the buyer."

Simmons said she can "fully accept" the public's scrutiny, as well as potential regulations and legislative actions regarding compensation policies that might ensue. But she said she does not believe her affiliation with Goldman Sachs will garner negative publicity for the University.

"I don't see how it could funnel into the University," Simmons said. "It could funnel to me, but not to the University."

She added that if she ever thought her actions "put Brown in a difficult position," she would be "very concerned."

Stephen Nelson, an assistant professor of educational leadership at Bridgewater State College who studies university presidents, agreed that the likelihood of the issue becoming a publicity problem for Brown is relatively low.

"Generally, it runs under the radar screen," Nelson said of university presidents' positions on corporate boards. "I don't mean that anybody is hiding it. It's just not that big of a deal for the average person."

Regardless of the potential effects on Brown's image, Simmons said her work on corporate and nonprofit boards is important to her personally.

"What I'd like my students to understand is that we all make decisions about what we are going to commit to doing," Simmons said. "In making that decision, and a commitment, our obligation is to do the best we can and to do it ethically, but not to be buffeted about."

Simmons said she originally joined Goldman's board at the recommendation of Smith's Board of Trustees around the time that she started a center for financial literacy on campus.

"We had a big push to think about how we could improve the knowledge and ability of women to manage their financial affairs," she said. "At the same time, there was a good deal of interest in the fact that women have not done so well in the financial sector and on Wall Street."

Simmons said she and Smith's Board of Trustees sought to make certain fields more accessible to women and minorities through her service on the boards of Goldman, Texas Instruments and Pfizer.

"I think we had a good discussion about whether or not the time allocation and the involvement with corporate boards would do anything for my position as president of Smith," she said. "They were persuaded that it would, and so with some reluctance I acceded to that."

She called her work with women and minorities on boards meaningful to her in "a way that a lot of people won't understand."

Simmons said her service on Goldman's board gave her the economic savvy to take certain risks that she might not have taken otherwise, such as the introduction of need-blind admissions. But Simmons said she was unsure of what, if any, skills still remain for her to take from Goldman's board.

"I appreciate the question about whether or not it's the right company for me to be involved with at this point," she said. "That's a legitimate question. It is one that I think about, as I think about everything that I do."

If Simmons were to leave Goldman's board, she said, she does not think she would join another board.

"At this juncture, I sort of think I would like to devote most of my time to Brown," she said. "So my guess is that if I leave boards, I'm not going to replace them."

One reason Simmons cited not to seek out new positions was that the seniority she now enjoys on Goldman's board allows her to advocate for programs to help women and minorities.

Simmons said that, as with her retirement from Pfizer's board three years ago, when to call it quits with Goldman will not be a decision she makes by herself, but rather in cooperation with the Corporation, the University's highest governing body, with which she meets regularly to evaluate her actions.

"I feel very strongly that I don't know enough as an individual — a sole individual — to make that decision alone," she said.

Matthew Mallow '64 P'02, a Corporation fellow, also acts on her behalf whenever a conflict of interest could arise between her function as president and a director for Goldman, she said.

"The president is not involved in any way" with the process of selecting a bank through which to issue debt, Executive Vice President for Finance and Administration Beppie Huidekoper wrote in an e-mail to The Herald.

The University has employed Goldman Sachs in the past for debt services, and Goldman currently serves as the remarketing agent for some of the University's outstanding debt, Huidekoper wrote.



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