UC top brass stopped pursuing lucrative board seats after Katehi controversy

UC Davis Chancellor Linda Katehi apologizes to lawmakers

UC Davis Chancellor Katehi apologizes to lawmakers over ‘lapse’ in taking DeVry seat.
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UC Davis Chancellor Katehi apologizes to lawmakers over ‘lapse’ in taking DeVry seat.

University of California administrators stopped pursuing high-dollar moonlighting positions after scrutiny of former UC Davis Chancellor Linda P.B. Katehi’s corporate board seats prompted tighter restrictions last year.

A new UC report shows that only 11 senior managers accepted outside positions between July 21 and Nov. 30. Only three of the positions are paid, and the compensation totaled just $9,510.

That marked a dramatic shift from the array of high-paying outside jobs approved in 2015. That year, 17 managers asked to take new jobs paying a total of $720,000, with the highest earning $80,000 annually. Beyond that, some administrators received stock options whose value was undetermined at the time.

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The new UC policy requires senior managers to obtain two levels of approval for outside jobs. Depending on the position of the employee, every senior manager would get a review at least at the chancellor level. Higher positions would require approval from UC President Janet Napolitano or the chair of the Board of Regents.

The rules ban moonlighting jobs that pose a conflict of interest or “reputational risk” to the university. And they limit top administrators to two outside paid jobs a piece instead of the three previously allowed.

The policy did not force administrators to give up highly paid board seats that were approved under the old rules. The total amount of outside income earned by senior UC management in 2016 is still being compiled; that total was $2.2 million in 2015.

Katehi resigned in August after Napolitano commissioned former federal prosecutors to investigate her actions as Davis chancellor, including whether she misled the public regarding her role in hiring firms to cleanse online search results for her name and UC Davis.

Katehi initially drew criticism in March after The Sacramento Bee reported that she accepted a $170,000 seat on the board of DeVry Education Group as it faced federal scrutiny for misleading students. The Bee also reported that she received $420,000 for sitting on the board of John Wiley & Sons, a position that critics said was a conflict of interest because students and state leaders were seeking to reduce the cost of textbooks.

The new review was the regents’ first semi-annual look at the approved “outside professional activities” of chancellors and other top managers.

“This is a result of our creating higher standards and passing rules concerning approval of and guidelines for any senior manager group earning compensation outside of UC,” said Bonnie Reiss, chairwoman of the Governance and Compensation Committee at a meeting in San Francisco last week. “ ... It gives us a chance to raise questions.”

Two requests by managers to assume outside posts were denied based on the appearance of a conflict of interest, according to UC staff.

The semi-annual review revealed that 11 UC senior managers were allowed to fill 19 jobs, including 18 for nonprofits during the last half of 2016. Sixteen of the jobs were unpaid, according to university records.

UC San Diego Chancellor Pradeep K. Khosla received permission to take a board seat with HCL Infosystems with an annual paycheck of $5,000. Two administrators at UC Berkeley took jobs on review panels for $1,500 and $3,010, according to university records.

None received stock options in the first reporting period.

The new policy also requires administrators to explain the benefits an outside position would bring their campus and UC, as well as a statement that spells out how much time the job would require.

Managers approved for the outside jobs during the 19-week period in 2016 reported they would spend 702 hours – some during business hours – in the positions. The three paid managers said they would work outside business hours.

The Bee’s reporting prompted state legislators to review the outside compensation policies of California’s public university systems in April. The state budget included language directing UC leadership to review and change the policy.

Katehi did not get the final sign-off from Napolitano before accepting the DeVry seat that paid $170,000 annually in stock and salary. She resigned that position within days, under pressure from Napolitano, Assemblyman Kevin McCarty, D-Sacramento, and watchdog groups.

Katehi had permission from UC to join the Wiley & Sons board.

“I am pleased we were able to bring some positive change in the system and to bring some transparency,” McCarty said.

The new policy applies only to the university’s 165-member senior management group, which includes Napolitano, campus chancellors, medical center CEOs and directors of national laboratories, as well as some high-ranking administrators who report directly to them. Similar policies for staff and faculty won’t be revised, UC officials say.

The outside professional activities policy for senior management was last revised in 2010 after public outcry over the extensive activities of some campus chancellors. Faculty policies underwent a major revision in 2014.

Diana Lambert: 916-321-1090, @dianalambert