Article covers Gee’s spending, marijuana at the chancellor’s mansion
A 3,015-word front-page story published today in The Wall Street Journal examined efforts by the Vanderbilt Board of Trust to rein in Chancellor Gordon Gee’s “lavish spending,” after concern was sparked by his wife’s alleged marijuana use at the chancellor’s mansion.
Vice Chancellor of Public Affairs Mike Schoenfeld said the Wall Street Journal article does not address any issues that have not already been addressed by the Board of Trust.
The article “Vanderbilt Reins in Lavish Spending By Star Chancellor” by Joann S. Lublin and Daniel Golden began:
“At Vanderbilt University, the board is trying to rein in star chancellor E. Gordon Gee, without running him off.
“Since arriving here in 2000, the 62-year-old Mr. Gee has dramatically boosted the 133-year-old school's academic standing and overseen fundraising of more than $1 billion. Mr. Gee's $1.4 million annual compensation is among the highest for U.S. university leaders.
“But supervision of Mr. Gee by the university's 44-member Board of Trust has "probably been a little loosey-goosey," says trustee Edward Malloy, a former president of the University of Notre Dame. Vanderbilt paid more than $6 million, never approved by the full board, to renovate and enlarge Braeburn, the Greek-revival university-owned mansion where Mr. Gee and his wife, Constance, live. The university pays for the Gees' frequent parties and personal chef there. The annual tab exceeds $700,000. Some trustees' concern was aroused when they learned that Mrs. Gee was using marijuana at the mansion. The chancellor told some trustees she was using it for an inner-ear ailment.
“Now change is afoot. Trustees recently created a subcommittee to monitor Mr. Gee's spending. For the first time, the full board will get reports about his expenditures and pay package. A second new board committee is scrutinizing potential conflicts of interest and likely will look at the university's longtime contract with a parking company in which a trustee holds a big stake.”
Schoenfeld said the Board of Trust has always had a thorough process for reviewing expenditures and other financial matters, and the changes taking place simply formalize oversight pracitices that have long taken place informally. Schoenfeld said Vanderbilt's long-standing practice was for the chairman of the Board of Trust to handle the chancellor's compensation. When John Hall became chairman, Schoenfeld said, he created a formal compensation committee to review compensation and related issues and act on behalf of the board. In 2005, the Board of Trust moved to require the executive committee to approve executive compensation and report the results to the full Board of Trust.
The article said the Board of Trust’s actions come at a time when national concern over executive pay and accountability is reaching academia. The article mentioned controversies surrounding administrators at American University, the University of California system and Texas Southern University.
The majority of the article, however, focused on Gee. The article examined Gee's spending while president of West Virginia University, University of Colorado, Ohio State University and Brown University. It noted that Colorado paid to build Gee a $780,969 house, and Ohio and Brown also paid to rennovate the homes Gee lived in while president of those universities.
Gee defended such rennovations, telling the Wall Street Journal a home with generous entertaining space is an essential fund-raising tool for a university leader. Gee defended the $6 million rennovation of Vanderbilt's Braeburn, saying the house is used for several hundred events each year and a significant amount of university fundraising has been done there.
According to the article, Gee’s spending only recently became a concern for the Board of Trust:
“The renovations, the entertaining and Mr. Gee's pay package stirred little dissent on campus for five years. Mr. Gee was viewed as a campus hero and the university became significantly more selective. Vanderbilt admitted 34% of its applicants this year, compared with 55% in 2000.
“In the fall of 2005, university employees discovered that Constance Gee, a tenured associate professor of public policy and education, kept marijuana at Braeburn and was using it there, according to people familiar with the matter. A few weeks later, several trustees and a senior university official confronted Mr. Gee in his office, telling the chancellor he shared responsibility for allowing marijuana on university property, the person familiar with the situation recalls.
“Trembling, the chancellor replied, "I've been worried to death over this," according to this person. Mr. Gee said his wife smoked marijuana to relieve an inner-ear ailment, this person says. The Gees decline to comment on the incident.
“Mrs. Ingram, Vanderbilt's board chairman, formally reprimanded Mrs. Gee for possessing and using the illegal drug. The matter was "handled appropriately and satisfactorily," says Mrs. Ingram, who is chairman of Ingram Industries Inc., a conglomerate with interests in book distribution and shipping.”
Vice Chancellor Schoenfeld declined to comment on Constance Gee, saying the university does not comment on faculty and staff's personal matters. He said all appropriate and relevant university policies have been followed in this case.
The article continued:
“The marijuana incident troubled some trustees, who were bothered that Mr. Gee never told the full board about it, according to people familiar with the matter. To these trustees, the incident demonstrated that Mr. Gee needed to be more accountable to the board.
“Aware of the trustees' concerns, Vanderbilt General Counsel David Williams reviewed Mr. Gee's spending, looking for personal expenses. Mr. Williams questioned the absence of clear records documenting time the chef spent preparing meals for the Gees rather than for university events. Mr. Gee later agreed to cover about one-third of the chef's roughly $50,000 salary -- more than before. "When they [university officials] tell me what needs to be done, I always write the check," Mr. Gee says. "But sometimes, I get heartburn" from the requests.
“Restive trustees then asked Mrs. Ingram for a broader look at Vanderbilt's governance system, pointing to the federal Sarbanes-Oxley law on governance of publicly traded companies and the scandal at American University, according to Mrs. Ingram. She formed a committee to determine if the university was following "best practices," she says. The committee, led by retired investment banker Joe Roby, found the full board never approved the budget and other financial items between 2000 and 2005.
“The committee report, which was reviewed by The Wall Street Journal, recommended that trustees take a more active role in university affairs, including strategic planning, capital spending and management compensation. It also suggested a special panel to monitor Mr. Gee's budget and outlays for entertainment, travel, food, staff and upkeep of Braeburn. The panel would report annually to the full board.
“The recommendations sparked a spirited board debate. Mrs. Ingram says she initially opposed an April board vote to adopt the report and create the expense panel. Later she retreated, and the board unanimously endorsed the tougher oversight measures.”
According to the Wall Street Journal, the Board of Trust is taking steps to implement more control:
“Early this year, board members began talks with Mr. Gee about a new employment agreement. The chancellor says he sought to update his offer letter "in light of the changing nature of corporate governance."
“One issue on the table was Mr. Gee's seats on five corporate boards. Fewer than 2% of U.S. corporate directors hold more than four seats, according to proxy-advisory firm Institutional Shareholder Services. As trustees considered inserting a limit into the new agreement, Mr. Gee recalls, "I said I would move back to three boards" over the next year.
“The agreement, signed in August, restricts Mr. Gee to three public-company directorships. It also says the chancellor must get
prior approval for budgets in five categories including house maintenance and entertainment, according to a person familiar with the matter.”
Gee told The Wall Street Journal changes will continue.
"You're covering us in the middle of a movie," he says. The chancellor favors more accountability -- within limits. "We have to make certain that we get it right first," he explains, "so you don't get the pendulum swinging too far...in terms of micromanaging."
Allison Malone and Glenna DeRoy contributed to this report.
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