The Public Eye

UC Davis chancellor apologizes, will donate textbook stock to student scholarships

Controversy not an unfamiliar companion for UC Davis Chancellor Linda Katehi

UC Davis Chancellor Linda Katehi has undergone significant scrutiny and criticism during her tenure at the university, stemming from incidents such as the pepper-spraying of peacefully protesting students to her service on corporate boards.
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UC Davis Chancellor Linda Katehi has undergone significant scrutiny and criticism during her tenure at the university, stemming from incidents such as the pepper-spraying of peacefully protesting students to her service on corporate boards.

As a Sacramento assemblyman called for her to resign Friday, UC Davis Chancellor Linda P.B. Katehi apologized for accepting questionable corporate board positions and pledged to give $200,000 in textbook company stock to a scholarship fund for UC Davis students.

Katehi, 62, was initially under fire this week for taking a board position last month with DeVry Education Group, a for-profit company under federal scrutiny for allegedly exaggerating job placement and income statistics. She resigned that post Tuesday.

She faced additional criticism Thursday after The Sacramento Bee reported that Katehi received a total of $420,000 in income and stock across the 2012-2014 fiscal years as a board member for John Wiley & Sons, a publisher of textbooks, college materials and scholarly journals. Her tenure came as students and state leaders sought to reduce the cost of textbooks and encouraged public colleges to use free, digital alternatives.

“I take my responsibilities as Chancellor of UC Davis, and to the entire University of California, very seriously and sincerely regret having accepted service on boards that create appearances of conflict with my deep commitment to serve UC Davis and its students,” Katehi said in a statement released late Friday. “I have resigned from the DeVry board and intend to donate all the stock proceeds I made from serving on the John Wiley and Sons board to a scholarship fund for UC Davis students. I look forward to continuing to serve the UC community.”

Katehi’s stock is worth $200,000, according to UC Davis spokeswoman Dana Topousis.

Assemblyman Kevin McCarty, D-Sacramento, previously asked Katehi to resign from the DeVry seat. But he said news of her Wiley board position, on top of the DeVry situation, prompted him Friday to seek her resignation as chancellor.

“Publishers are gouging students for the cost of textbooks,” McCarty said. “The optics of this are horrible. I’ve lost my confidence in Ms. Katehi and I think this warrants calling for her resignation.”

McCarty is the chairman of the Assembly budget subcommittee overseeing education finance. He said he had an hourlong meeting with Katehi in his office Thursday to discuss the DeVry appointment and he wasn’t satisfied with her justification for taking the seat. He would not reveal what Katehi said, but he called some of her reasons “weird” and said others “didn’t make sense.”

Katehi didn’t tell him about her relationship with John Wiley & Sons when they met, he said.

The chancellor traveled to Florida in February to accept the DeVry seat, which pays $70,000 annually, as well as restricted stock units with an approximate value of $100,000, according to filings with the Securities and Exchange Commission.

Katehi earns $424,360 a year as chancellor of UC Davis, where she has served since 2009.

Assemblyman Jose Medina, D-Riverside, chairman of the Assembly Higher Education Committee, called Friday for oversight hearings as the Legislature considers UC funding.

“Chancellor Katehi’s paid positions with private, for-profit corporations raise important questions about UC’s conflict of interest and outside employment policies,” he said in a statement. “This information is particularly concerning in light of the positive strides that the state has made to increase funding for the system.”

The UC Office of the President reviews potential outside board positions before allowing chancellors to accept them. A UC spokeswoman said Katehi accepted the position with DeVry without completing the required approval process and without final approval from UC President Janet Napolitano.

It is not clear whether the president’s office signed off on the board seat with John Wiley & Sons. President’s office representatives have not answered that question this week, but they provided spreadsheets that show she served on the Wiley board.

According to UC data, she spent 168 hours during the 2012-2014 fiscal years on her Wiley work. For the 120 hours that came during UC Davis business hours, she used vacation time.

“I appreciate that Chancellor Katehi has apologized and taken responsibility for having accepted board positions that created an appearance of conflicts of interest with her University responsibilities,” Napolitano said in a statement Friday afternoon. “I deeply value Linda’s strong record in helping to make UC Davis a world-class center of scholarship and research, and continue to believe in the value of her contributions to the University. We will take all steps necessary to prevent a recurrence of this unfortunate incident.”

Following public outcry a decade ago over the extensive outside activities of some of its campus chancellors, the University of California adopted a policy limiting the number of boards that top employees can serve on and setting ground rules on conflicts of interest.

In January 2006, The San Diego Union-Tribune reported that then-UC San Diego Chancellor Marye Anne Fox was serving as a director for 10 corporations and nonprofit organizations. Seven of the positions were compensated, netting her at least $410,000 in cash and stocks, more than her salary of $373,500 that same year.

The San Francisco Chronicle later found that then-UC San Francisco School of Medicine Dean David Kessler reported affiliations with 15 governing or advisory boards, and then-UC Riverside Chancellor France Cordova served on four.

The current policy, ultimately adopted in January 2010, applies to a senior management group that includes the university president, campus chancellors, medical center CEOs and directors of three national laboratories, as well as some of the administrators that report directly to them. It caps those employees at three for-profit board positions for which they are paid and have governance responsibilities, and mandates that they use only personal time for board business.

It also prohibits them from conducting any business with a board until their superior – sometimes the Board of Regents itself – has assessed potential conflicts of interest and approved the appointment.

But the policy leaves the primary responsibility for determining and disclosing conflicts, actual or apparent, with the employees, who are “expected to conduct themselves with integrity and good judgment and must avoid the appearance of favoritism in all of their dealings on behalf of the University.” They are forbidden from making or influencing government decisions where they have a financial interest.

Nine University of California chancellors received nearly $1.5 million in cash compensation, in addition to deferred compensation and other stock options for outside work for corporations and nonprofits from 2012 to 2014, according to data provided by the university.

Some appointments appear to have benefited the universities, which in some cases received additional bonuses for a chancellor’s work. Other roles seem unrelated to the academic institutions, such as former UC San Francisco Chancellor Susan Desmond-Hellmann’s role on the board of Procter & Gamble, from which she received $220,000 in cash and additional stock options for 180 hours of work as a committee member in 2012 and 2013.

The fallout from the controversy had UC Davis students “surprised, shocked and confused” Friday, said Mariah Watson, president of Associated Students, University of California, Davis. She said she wants the UC system to review its policy of allowing high-ranking administrators to take paid board seats on the side.

“What was the importance of her being on the governing board of another university, and how does that change her priorities for UC Davis?” Watson asked.

But Watson said that McCarty’s call for Katehi’s resignation is too harsh and that the chancellor’s departure from the DeVry board should be enough. “Any university would be honored to have her as a leader,” she said.

Barry Broome, CEO of the Greater Sacramento Area Economic Council, an economic development group organized by local CEOs, came to Katehi’s defense. “I’m surprised that something so prevalent among university leadership has generated this reaction,” he said in a statement.

Katehi arrived at UC Davis in 2009 under a cloud. As provost of the University of Illinois at Urbana-Champaign, she faced allegations that the university put hundreds of applicants – some with weak academic records – on a list for special consideration after influential people lobbied on their behalf. Katehi asserted that she had no knowledge of the special list of admissions.

In 2011, Katehi faced criticism as UC Davis chancellor when a university police officer casually doused 10 student protesters with pepper spray as they sat with their arms linked. Video of the incident went viral and sparked emotional responses from across the globe. Katehi said that the police were told to withdraw if students refused to leave the quad and that she did not approve officers clad in riot gear moving in on students.

In the days afterward, students handed out fliers with Katehi’s silhouette and the word “resign.”

As a professor, Katehi was considered a rock star in the world of engineering. Before working at Urbana-Champaign, Katehi was the dean of engineering and a professor of electrical and computer engineering at Purdue University. Before that she was associate dean for academic affairs and graduate education in the College of Engineering at the University of Michigan.

According to UC records, Katehi has retained an interest as board member and owner of EMAG Technologies, an Ann Arbor, Mich.-based technology company she co-founded while at the University of Michigan. She reported receiving $103,000 from the firm in 2012 and $25,000 in 2013, but no income in 2014.

University of California President Janet Napolitano says UC Davis Chancellor Linda Katehi had good intentions when she accepted a seat on the board of DeVry Education Group. The chancellor has since apologized and taken other appropriate measures,

A peaceful protest Friday seeking the resignation of UC Davis Chancellor Linda P.B. Katehi morphed into a sit-in in her office lobby with 35 students and protesters criticizing her acceptance of questionable board seats.

Katehi protesters explain their position in words and song

Taryn Luna contributed to this report. Diana Lambert: 916-321-1090, @dianalambert Submit tips to publiceye@sacbee.com

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