On Saturday, the Wall Street Journal published a shocking and terrifically good piece about Stanford president John Hennessy. (Online, but available to subscribers only; the Stanford Daily writes about it, not very well, here.)
Illustrated by artwork showing Hennessy holding a thick wad of cash, the article begins by noting that last November Hennessy earned more than $1 million, none of which came from his presidential salary. The money included a $75,000 retainer from Cisco and revenues from sales of stock in Cisco, Atheros Communications and Google, where he sits on the board.
That month makes up only one part of an income stream that many in academia consdier without precedent for a university president. In the past five years, through exclusive investments and relationships with companies, Mr. Hennessy has collected fees, stock and paper stock-option profits totalling $43 million…That dwarfs his $616,000 annual compensation at Stanford…..
Mr. Hennessy’s outside business interests crisscross his life at Stanford. Stanford and Google have a number of business relationships, giving Mr Hennessy a seat on both sides of the table. He has invested in venture-capital firms generally inaccessible to the public, many of which invest the university’s money. Mr. Hennessy has introduced some of these firms to promising Stanford entepreneurs. He has also put his own money into Stanford-based projects.
The article then goes on to detail conflicts of interest that would make an Enron executive blush. It is astonishing that Stanford’s board of trustees permits thisâbut because Hennessy is a gifted fundraiser, it does.
This is a fascinating and important story; you can’t help but think that it’s only a matter of time till one of Hennessy’s investments blows up in Stanford’s face.
And the article realizes something very important: As universities get richer and richer, and those who work at them fall prey to the greed that courses through today’s money culture, the way that universities are reported on needs to change. Universities must be considered subjects for business, political and investigative reporting. At the moment, universities exist in a gray area where they exploit private sector opportunities while claiming to be non-profits that should be reported on only for that aspect of their work. Meanwhile, the money pours in, and university officials reach out their armsâand open their pocketsâto catch it….
Here’s a suggestion for Derek Bok: President Bok, you’ve written eloquently on ethical issues regarding universities and the private sector, but your writings have been reluctant to mention specifics and spark controversy.
You could do an enormous service here by writing about the increasing profiteering of university presidenciesâit’s astonishing to read how many university presidents earn lucrative outside incomes by sitting on corporate boards which have business before their universitiesâand naming names.