Lawmakers debate board memberships

Amy Poppinga

Amy Poppinga

President David Chicoine’s position on the Monsanto Board of Directors has come under scrutiny once again, this time in the South Dakota Legislature.

Senator Frank Kloucek, a 1978 graduate of SDSU, has proposed three bills to look at the issue of top university officials serving on corporate boards. The Scotland Democrat said he does not believe university presidents should serve on corporate boards because when a president has such close associations with a corporation, the university’s research could look biased toward that company, he said.

“I don’t want to see the image of SDSU tainted in any way, shape or form,” he said.

Kloucek’s three bills, SB 111, 112 and 113, range from a complete ban on presidents serving on boards to allowing state employees to serve on boards only if they do not receive compensation to requiring the Board of Regents to create a policy that governs regental employees accepting outside employment. The bills were scheduled to get a hearing on Feb. 3 in the Senate State Affairs Committee.

“(The three bills) will give the Legislature a smorgasbord of opportunities to do the right thing,” he said.

While it is not uncommon for university presidents across the country to serve on boards, Chicoine’s situation brought the issue to the forefront in South Dakota, Kloucek said. The Scotland senator said he does not have anything personally against Chicoine, and his bills could affect every university president in the state.

“South Dakota certainly needs to hold its university presidents to a higher standard,” Kloucek said.

Chicoine, who was appointed to the 11-person Monsanto board as an independent member on April 15, helps review and approve the company’s budgets, long-range plans and corporate policies related to social responsibility. He also helps hire, fire and evaluate Monsanto’s management and is expected to have no material relationship with the company. Through these administrative experiences, Chicoine has said that his board position could help him do his job as SDSU president better.

The Monsanto Board of Directors meets five times a year, for two days each. A sixth conference call meeting is held in December. Chicoine uses his annual leave to attend these meetings, he said.

Through his Monsanto position, Chicoine will receive about $400,000 between a retainer and benefits for his first year of work with the board. In subsequent years, he will receive a $195,000 retainer.

Chicoine said he does not plan to testify in committee about these bills, and he did not want to speculate as to what he would do if one of the bills passed. He did say, though, that these bills present the legislators with an opportunity to discuss some important issues.

“It’s good to have these discussions,” he said. “It’s the right of the people elected to office to do what they think is the right thing.”

As for the Board of Regents, Jack Warner, executive director and CEO of the Board of Regents, said prohibiting presidents from serving on corporate boards could actually hurt the state’s universities in some ways.

“We see the advantages in having a president serve on these corporate boards as an independent director, because there is value in the connections those presidents make,” Warner said.

These connections can help a president secure enhanced fundraising or grants for a university, Warner said. Plus, since many other states allow presidents to sit on boards for compensation, having a policy against that practice could hurt universities when they are searching for a new leader, he said.

“Preventing presidents from serving on these boards removes our ability to compete for highly qualified talent to lead our universities,” Warner said.

Another bill, HB 1116, would have also affected Chicoine’s position with Monsanto, but it was recently tabled in the House State Affairs Committee.

The bill’s prime sponsor, Rep. Jacqueline Sly, a Rapid City Republican, said she agreed to table the bill, but the conflict-of-interest issue may still come up.

“After talking with some other people, I think we want to look at other possible options,” she said.

HB 1116 prevented university presidents and executive officers from accepting outside employment with a business if they received more than $100,000 per year from the university and if they would receive $10,000 or more from the corporation.

Chicoine said he thought it was interesting that the bill addressed the situation as an “income-earning issue.”

“You can do it, you just can’t have an income,” he said.

Sly said the bill was not meant to stifle anyone’s income, but she said that legislators do need to look at whether corporations could have undue influence over presidents who serve on their boards, causing them to make university decisions in the corporations’ favor.

“We need to look at what is the intent of the corporation in asking a president or other executive to be on a board,” she said.

Warner, however, said he thinks these bills are unnecessary.

“I think this is an issue for the Regents to manage,” he said. “I think we managed very well when the whole thing came up last year.”

Warner said the board has a conflict-of-interest policy in place and is currently making updates. As the Board of Regents staff works through that process, they will diligently look at ways to deter potential conflicts or an appearance of conflicts, he said.

No matter what people think on the issue, Chicoine said now is a good time to voice their opinions.

“It’s an opportunity for people to express their views and discuss the topic,” he said.