Controversy not an unfamiliar companion for UC Davis Chancellor Linda Katehi
UC Davis Chancellor Linda P.B Katehi received $420,000 in compensation as a board member for John Wiley & Sons, a leading publisher of science, engineering and math textbooks for universities.
Katehi served on the Wiley board from 2012 to 2014, according to Securities and Exchange Commission filings. She received $125,000 in pay and stock in 2012, $144,000 in 2013 and $151,000 in 2014.
Under pressure, Katehi resigned this week from the board of DeVry Education Group as the for-profit company faces scrutiny from federal officials for allegedly deceiving students about job and income prospects.
Katehi’s decision in February to accept a paid board seat from DeVry prompted state Sen. Marty Block, D-San Diego, to demand information on how much she and other chancellors receive in side income at a Capitol hearing Thursday on education funding.
“It’s become apparent in the last 24 hours that some of the CEOs of these campuses have more than one job and make a lot of money in other places,” Block said during a budget subcommittee meeting Thursday afternoon. “Chancellor Katehi is the case on the front page of The Sacramento Bee today and my guess is there might be others.”
He asked representatives from the University of California, California State University and California Community Colleges to send him information about the outside jobs held by their top education leaders and the compensation they earn from them.
“If, in fact, they are making $500,000 on the side by sitting on six different corporate boards ... that is important for the Legislature to know,” Block said. “How many jobs do they have and how much time do they spend on these other jobs when they are supposed to be on the state dime?”
UC Davis officials did not respond to requests for comment Thursday afternoon.
New Jersey-based Wiley & Sons describes itself as a global provider of knowledge-based services, including scholarly journals, reference materials and textbooks. Among the business risks listed in its most recent annual report is “student demand for lower cost textbooks in higher education.”
Ed Howard, senior counsel for the Center for Public Interest Law, said the Wiley board seat potentially posed a conflict of interest for Katehi. She was “being paid a huge sum of money by a private, for-profit corporation that has business with the University of California ... It’s pretty much the dictionary definition of a conflict of interest,” he said.
The UC Office of the President considers whether board positions create a conflict before allowing chancellors to accept them. A UC Office of the President spokeswoman did not respond to requests for comment Thursday.
Katehi earns $424,360 a year as chancellor of UC Davis. DeVry board members earn $70,000 annually, as well as restricted stock units with an approximate value of $100,000, according to filings with the SEC. Katehi stepped down without pay from DeVry.
Henry Yang, president of UC Santa Barbara and a mechanical engineer, is the only other current UC chancellor to have served on a corporate board, according to a Sacramento Bee search of SEC filings.
Yang earned more than $1 million in director’s fees, stock awards and other forms of compensation while serving as board member of American Axle & Manufacturing Holdings Inc., an auto-parts maker in Detroit. Yang served on American Axle’s board from 2004 to 2013.
In response to a Bee inquiry, Yang released a statement regarding his board post. “With official approval from the UC Office of the President, I served on the board of directors and, with my engineering background, helped create a new technology committee to help revitalize competitive technology during a challenging time for the American automotive industry,” he said. “I completed my term in April 2013.”
Yang is paid $389,340 annually as UC Santa Barbara chancellor.
“Oh, my God,” Howard said. “If these two chancellors have so much free time that they are able to earn $1 million and $400,000 while moonlighting, maybe we should cut their pay and use it to help people priced out of the University of California.”
Katehi’s DeVry appointment came to light this week after critics questioned why Katehi agreed to lend the University of California’s stature to a for-profit college system trying to defend its higher education legitimacy.
Katehi resigned the $70,000-a-year seat Tuesday after a discussion with UC President Janet Napolitano. UC spokeswoman Dianne Klein said Wednesday that Katehi violated policy when she accepted the board seat without UC permission at a DeVry trustee meeting and attended an orientation in Weston, Fla., on Feb. 15-18.
The Federal Trade Commission suit filed against DeVry on Jan. 27 contends that the company made false and unsubstantiated claims when it began advertising around 2008 that 90 percent of its graduates obtain well-paying jobs in their fields within six months of graduation. Federal officials also take issue with a 2013 claim that DeVry graduates earn more than other graduates.
DeVry, which operates 13 campuses in California, said in a January statement that it “intends to vigorously contest” the FTC complaint, which it believes relies on “anecdotal examples that exaggerate the allegations but do not prove them.”
Students cannot receive Cal Grants to attend the for-profit institution, according to the California Student Aid Commission. Under state law, colleges are ineligible for Cal Grants when they have high loan default rates, low graduation rates or both.
Katehi spokesman Gary Delsohn said DeVry approached Katehi about the seat in December, before the company was sued by the Federal Trade Commission.
At the February meeting, DeVry board members voted to add Katehi and University of Arizona President Ann Weaver Hart to the board.