What are Trani and Casteen Really Doing On Corporate Boards?

In Virginia, as in most states, being the head of a large public university is a prestigious job. Along with it come lots of perks, such as being appointed to various education and public service committees and also, in some cases, to lucrative seats on corporate boards.
Therein lies the problem.
Two former heads of two major universities — the University of Virginia and Virginia Commonwealth University — have been or are on the boards of some publicly-held firms that have had some very serious problems. These call into question why the academics are involved, what their roles on the boards really are or have been, whether being on the boards hurts their school’s reputation and whether they even have the time for it.
One is John Casteen III, who has just left the presidency of the University of Virginia. He had been a director of Wachovia for years, before the North Carolina bank racked up losses of $23.88 billion in 2008 and was forced into a shotgun merger with Wells Fargo National Bank using taxpayer bailout money.
After its tough and controversial takeover by First Union, Wachovia stumbled because it got involved in subprime mortgages, notably by buying GoldenWest, a subprime mortgage lender. Casteen, who did not respond to questions, was on the board during that takeover and throughout all of the drama when the financial crisis hit in late 2007, spelling doom for Wachovia.
Today, Casteen is a defendant in a massive lawsuit brought on by pension fund managers from California and Louisiana among other places, who say they were cheated by Wachovia and saw their investment crash and burn.
If that weren’t enough, Wachovia has settled with the federal government by paying fines of $160 million for its involvement in laundering drug money through Mexican currency exchange houses.
Both events happened while Casteen was on the board. In 2007, Casteen had total compensation of $243,500 from his service on Wachovia’s board and stock ownership.
Eugene P. Trani left the presidency of Virginia Commonwealth University in 2009 after improving the school’s standing and expanding its presence in downtown Richmond. But Trani was also a director of LandAmerica Financial Group, a Richmond-area title insurer that went belly-up in 2008, taking with it millions in investors’ money.
One wonders what Trani was doing in those final days of LandAmerica Financial Group in late 2008 when bankruptcy loomed.
Today, Trani is on the board of Richmond-based Universal Corporation, a global tobacco marketer. Universal’s subsidiaries have just agreed to pay $8.98 million in a tobacco bribery scandal that stretches from Brazil to Thailand to Africa. The firm has issued a public apology. Trani received total compensation for his board service of $159.032.
Once again, what was Trani doing on the board?He is on the board’s audit and pension investment committees? Did he know about the bribery problems? Did he do anything to correct the matters? He did not respond to requests for comment.
And speaking of tobacco, Casteen has just been appointed to the board of Altria, which owns cigarette giant Philip Mrris USA. His pay wasn’t available, but groups such as Campaign for Tobacco-Free Kids say that high profile people such as university presidents should avoid being used to improve the image of tobacco firms.
Being Virginia, the state may be too conservative to have the student protests of the type in Ohio that led to E. Gordon Gee, president of The Ohio State University, being scolded off the board of Richmond-based Massey Energy, a coal firm with a bad safety and environmental record.
Two other heads of schools are not on corporate boards. One is Ed Ayres, president of the private University of Richmond and the other is Michael Rao, who succeeded Trani at VCU.
In Virginia, the ruling elite, and that includes the Richmond Times-Dispatch, never asks any tough questions about academics and corporate boards. They adopt the stance of many corporations that I have dealt with — you have no right to ask, we defend our board at all costs and directors should be considered gods walking the earth.
Maybe. A spokesman for the National Association of Corporate Directors says that academics can offer valuable and unique perspectives to corporations. But the dangers of academics serving on corporate boards remain.
Peter Galuszka

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11 responses to “What are Trani and Casteen Really Doing On Corporate Boards?”

  1. E M Risse Avatar
    E M Risse

    At the end of a recent post Peter said:

    To EMR, I say, "Listen to this! (chuck, thud, chuck, thud)."

    The best guess is that was reference to throwing rocks at empty pigeon holes…

    Sorry Peter. In that post and in this one there were no empty pigeon holes.

    As in the post by Mr. Bacon, there are pigeons in all the holes at which you were tossing stones.

    In fact they were not stones, good points all. Even if some took your bait and tossed back.

    In EMR's view the question raised here comes down to understanding the role of, and moral responsibilities of being in a repsonsible role in an Agency, an Enterprise or an Instition.

    In this case, having a foot in more that one causes inherent risks. (A 'public' university is an Agency, Banks with private stockholders are Enterprises. Both like to call themselves Instituions but they are not.)


  2. Gooze Views Avatar
    Gooze Views

    This looks the the start of a beautiful friendship!


  3. Anonymous Avatar

    It's just another form of double-dipping.

    Govn't employees at all levels do it…they put 20 years in at one job then hop over to the next city, county, state, or agency and take another job, usually for more money, all the while collecting a retirement check from the previous job.

    You often hear them say that it's OK for them to do it because, "people in the private sector do it."

    B.S. – The reality is the govn't is the only place where people over 50, assuming they have previous experience working for the govn't can find gainful employment.

  4. So, how do I get on one of these boards? I don't owe anybody anything but a mortgage, not beholden, no conflicts of interest, no associations to speak of, no predilections other than to move ahead reasonably.

    And what, $20,000 a day wouldn't hurt, either.

    (I suppose improved spelling would help, hence the deleted post.)

  5. Groveton Avatar

    Well … when I first posted my comment I noticed that it had been posted 3 times. So, I deleted two of the three. For a while, only one copy of my comment remained. And then there were none.

    I am guessing that Google's Blogger software eventually recognized that it had erroneously posted 3 copies of my comment. So, it deleted the last two. Unfortunately, I deleted the first two.

    I write so many comments which I probably should delete it's a shame to see one deleted by mistake.

  6. Anonymous Avatar

    Having academics on corporate boards probably causes members of the business community to close their eyes to inefficiencies in the operation of colleges and universities. Don't rock the boat.


  7. Blogger seems to have some management inefficiencies, too.

    I've had the multiple post problem on other sites as well.

  8. Groveton Avatar

    Speaking of technology issues …

    Bacon -You Luddite!!

    It's August 20 so I set a light schedule for the afternoon. Why? so I can get cracking on Boomergeddon.

    But no.

    I look on Amazon.Com expecting to see the title released and expecting to buy it electronically with a single click of the mouse.

    But no.

    As of 7:00 AM EDT the title has not been released. OK – I am sure that will change.

    But then I see that the title will not be available via the Kindle.

    Dead trees?
    Physical shipment?
    Lugging yet another thing around in my briefcase?

    Well, I am certainly not going to get to read Boomergeddon today. So … what to do about that light afternoon schedule?

    Exchange a winge for a wedge?

    Yes, I'll go play golf.

    But I am interested as to why the Kindle option wasn't taken.

    Jim "the Luddite" Bacon – any comments?

  9. E M Risse Avatar
    E M Risse

    Two notes for Groveton:

    Mr. Bacon and EMR were lamenting recently about the silly hopes one much go through to get a publication ‘kindle ready.’ EMR is half way there on both The Shape of the Future and TRILO-G but it takes time and concentration and the requirements are exacting. In the old days (10 years ago when The Shape of the Future first went up on Amazon) it was a slam to meet their requirements. Now you have to do all the work to fit their specs. Jim said he was only partially done with his hoops too.

    If you enjoy playing golf on a day like this …

    EMR is sorry to see your comment taken down. You made a good point about public universities being Agencies. Then you referred to them as “institutions.” Just keep your finger off the shift key. They are Agencies, Institutions are different animals. See The Estates Matrix. Your post was a very good demonstration of why Vocabulary is important, even in seemingly straightforward contexts.


  10. Gooze Views Avatar
    Gooze Views

    "Chuck. Thud SQUAWK!"
    "Chuck. Thurd SQUAWK!"


  11. James A. Bacon Avatar
    James A. Bacon

    Groveton, Just to amplify the comments that EMR made about Kindle… What a royal pain in the butt! First of all Amazon's instructions are less than helpful. Second of all, I have to totally reformat the manuscript — a task which, I estimate, will take some 20 hours. When I get enough people bugging me to put the book in Kindle format, I will. Until then, I've got to sell books!

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