No. 35 May 16, 1972
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IN THIS ISSUE " FOR COMMENT: Corporate Responsibility NEWS IN BRIEF " The Advancement of Undergraduate Education: A Reply " Open Letter: Any Tuesday BALANCED BUDGET FOR 1972-73 " DO SOMETHING: A Women's Film Series " President Martin Meyerson announced at Council on May AAUP: Committee W Designs a Grievance Structure 10 that the University Trustees have approved a balanced " COUNCIL: Faculty of Arts & Sciences; Special Meeting budget for 1972-73, assuming a state appropriation of $13.8 million and possibly using realized capital gains in addition to income on investments. Other Council coverage: Page 8. COMMENCEMENT SPEAKER: JOHN KNOWLES Dr. John Hilton Knowles, President-designate of the Rocke- feller Foundation and former General Director of Massa- chusetts General Hospital, will speak at the Class of 1972's Commencement on May 22. Recipient of six honorary Dr. Knowles will be honored with an degrees, again Volume 18, Number 35May 16, 1972 Honorary Doctor of Laws Degree from this University. Published weekly by the University of Pennsylvania Dr. Knowles did his undergraduate work at Harvard Col- lege and received his M.D. from Washington University School of Medicine. His training and professional years were spent almost exclusively at Mass. General and as a Professor WHARTON DEAN: DONALD C. CARROLL of Medicine at Harvard Medical School. Dr. Knowles is also Donald Cary Carroll, Chairman and President of Technol- a Research Associate to the Program on Technology and ogy Management, Inc., and a former Professor of Manage- Society at Harvard and is a member of the Board of Direc- ment at MJ.T.'s Sloan School, has been named Dean of the tors of the Harvard Community Health Plan, Inc. He has Wharton School effective September 1, according to Presi- won 16 awards including the prized Markle Scholar Award dent Martin Meyerson. for his contributions to medical education. The University's Trustees named Dr. Carroll to succeed Dr. Willis J. Winn, who resigned last year to become Presi- dent of the Federal Reserve Bank in Cleveland, Ohio. Dr. Richard C. Clelland has served as acting dean for this aca- demic year. "Donald Carroll will bring to the Wharton School deanship a needed blend of academic and managerial experience which reflects two outstanding careers," President Meyerson com- mented. "He has worked on the frontiers of management and page 7 policy." Dr. Carroll received his doctorate in management from Massachusetts Institute of Technology in 1965, was a mem- TEN HONORARY DEGREES ber of the faculty of the Sloan School until 1969. There he served as head of the Management Information Systems In addition to Dr. John Knowles, honorary degree recipients Group, and the Operations Management Group. While at at this year's Commencement are: M.I.T., he took part in the program for management educa- William Gordon Bowen, Provost and President-Elect, Prince- tion in Colombia. For five years, he worked with Project ton University (Doctor of Laws) MAC, M.I.T.'s pioneering time-shared computer develop- Thomas Childs Cochran, Benjamin Franklin Professor of ment project. History (Doctor of Laws) A native of Chapel Hill, North Carolina, Dr. Carroll re- ceived his B.S. in mathematics from the of North Robert Galbraith Dunlop, Chairman and Chief Executive University Carolina. In addition to a doctorate from he Officer, Sun Oil Co. (Doctor of Laws) degree M.I.T., holds a bachelor's and master's from there. He is a Hanks, Chairman, National for degree Nancy Endowment the Arts member of Phi Beta Tau Beta Pi, and other of Kappa. honorary (Doctor Fine Arts) societies and has received Sloan and Ford Foundation fellow- Yu Hsiu Ku, Professor of Electrical Engineering (Doctor of ships. Laws) Dr. Carroll has lectured at a number of universities here Harold Francis Linder, Chairman of the Board, Institute for and abroad, including Cornell, U.C.L.A., Dartmouth, Centre Advanced Study (Doctor of Laws) d'Etudes Industrielles (Geneva), Universidad de Los Andes and Emily Hartshorne Mudd, Professor Emeritus of Family Study (Bogota), Centre de Recherches des Chefs d'Entreprise in Psychiatry, former Director of the Marriage Council of (Paris). His publications include "On the Realization of In- Philadelphia (Doctor of Science) telligent Management Information Systems" and "On the Structure of Control George Holmes Perkins, University Professor of Architecture, Operational Systems." Dr. Carroll is the first dean of the Wharton School to be former Dean of the Graduate School of Fine Arts (Doctor of Laws) selected from outside the University faculty. A Search Com- mittee, including faculty members, students, and alumni and Andrew artist (Doctor of Fine Arts) Wyeth, headed by Dr. Irving B. Kravis, Professor of Economics at (Continued on page 8) Wharton, recommended Dr. Carroll for the deanship. FOR COMMENT CORPORATE RESPONSIBILITY Following is a tentative draft of policy guidelines, submitted for comment to the University community by the Trustees Committee on Corporate Responsibility. A final draft of the guidelines will go before the Trustees for action at their October meeting. All contributions must be received by September 30, 1972, and should be directed to Professor Robert Mundheim, counselor to the Committee, at 138 Law School. TENTATIVE DRAFT GUIDELINES securities, it would have to gather and evaluate a large body For Investment in Publicly Held Companies of information presently not generally available. The process of informing itself so that decisions will be made 5, 1972 sufficiently May responsibly is likely to be costly. This memorandum examines the appropriate role of the (a) The concern of many institutions with the political, University of Pennsylvania as an investor and shareholder in social and moral impact of corporate activity has spawned a publicly held companies. The question posed is the extent, if number of collective efforts to gather and evaluate informa- any, to which the University should give weight to the general tion. Collective effort can effect significant cost reductions political, social, moral consequences or other public impact and the University and individual members of the University of activities of corporations in which the University is in- community might usefully participate in cooperative ventures vesting or is considering investing. which will facilitate the gathering and evaluation of informa- Wrestling with this difficult question requires consideration tion. The University and the Trustees' Committee on Corpo- of a number of factors: rate Responsibility have, for example, chosen representatives to attend seminars on other (1) The University has traditionally sought to manage its corporate responsibility by institutions, the African-American endowment to achieve maximum return on a risk adjusted collegiate sponsored by Institute and the on basis. An element in achieving return is the expense incurred by Project Corporate Responsibility. in managing the portfolio, including transaction costs. The (4) The University's stock holdings in a company typically constraints imposed on many important University activities constitute a small percentage of the stock outstanding. At by the inadequacies of the University's financial resources present, there is no case in which the University's stock hold- underscore the costs of departing from a maximization of ings permit it to control or influence corporate action. Thus, return principle in the management of University endowment. expenditure of Trustee or University energies to channel the activities of held to inhibit undesirable (a) However, the University has not pushed its maxi- publicly corporations or desirable social, or moral mum return policy to a logical extreme. For example, it has promote political, consequences can, in most cases, be to have little effect taken the position that it will not invest in certain kinds of expected tangible unless the views are shared other owners of enterprises or activities even if they promise the highest avail- University's by substantial able adjusted return. shareholdings. (2) The University is an institution which is peculiarly in- II hibited in its ability to take collective action. Its basic mission The University's role as a shareholder and investor may of discovering, improving and disseminating knowledge is be divided into three categories: as a buyer of securities, as effected through the efforts of individual members of the a holder of securities which has the right to vote on certain academic community. The University must, therefore, foster issues and to exert less formal pressures, and as a seller of an environment which gives maximum encouragement to each securities. individual in the academic community to pursue knowledge and express his views. The attempt to determine a majority A. As a Holder of Securities view or a consensus of the academic community creates a Holders of securities can face and sometimes act on the risk of dividing groups in the academic community along desirability of the issuer's engaging in a specific activity or political or doctrinal lines, and threatens community censure course of action. In recent years it has been increasingly pos- of those who disagree, thus spoiling the environment which sible to focus questions concerning corporate activity or the University is charged to promote. courses of action through shareholder proposals for share- (a) There are, of course, occasions when the University holder action. These proposals include efforts to require a must act as an institution. These occasions include invest- shareholders' vote on the selection of independent certified ment of its endowment funds and voting of its stock. How- public accountants for the company, distribution of post- ever, those decisions can be made without seeking or purport- annual meeting reports, cessation of corporate activity in ing to reflect a judgment of the academic community. certain portions of South Africa and broadening of the con- (3) The University's endowment portfolio typically con- stituency of the board of directors. tains between 100 and 150 separate securities. A still broader Although it has been argued that the importance of in- range of securities is considered as possible investments.