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Wednesday, May 6, 2009

Some question Monsanto-Chicoine relationship

South Dakota State University President David Chicoine will earn almost $400,000 in salary and stock options in the next year as a member of the board of directors for agribusiness firm Monsanto.

That is more than his annual salary as the head of South Dakota's largest university.

Chicoine's appointment was effective in April, and some SDSU students and faculty members have questioned him about his new role and its connection to an existing business relationship between the company and the public university.

Monsanto has contracted with SDSU for services and has contributed $367,000 in grants to researchers there. In March, the ag company gave SDSU $1 million to set up a plant-breeding fellowship.

While it's not uncommon for university officials to sit on the boards of private firms, some researchers worry this arrangement will cast doubts on the independence and credibility of the agricultural research being done on the Brookings campus. Skeptics say it might limit their job opportunities with competing firms, and a Kansas State University business ethics expert cautioned that such relationships could lead to conflicts.

Chicoine, who has a background in ag economics, said his involvement with Monsanto will give him additional expertise to use in his job as a university administrator.

"I assumed what I had been doing and was able to do professionally was of interest to them. ... The value I create as an independent board member is what the company has determined as an appropriate retainer," he said.

The Board of Regents has approved the appointment and Chicoine said Monsanto also looked into the situation before proceeding.

Chicoine will earn $195,000 each year for his service on the board. His first-year compensation also includes a one-time stock grant option of that same amount. He said his salary as SDSU president is about $320,000.

He will not be the first higher education official to serve on Monsanto's board. Sharon Long had been a humanities and sciences dean at Stanford University while serving on the board until fall 2007, according to Monsanto spokeswoman Danielle Stuart.

University presidents are called upon to be fundraisers for their schools, and relationships with companies such as Monsanto provide money for research and other campus programs. The need for private money has become even more acute during tough economic times. Schools have been trimming budgets, noted Diane Swanson, chairwoman of Kansas State University's Business Ethics Education Initiative.

"One would want that research and the scientists who weigh in on the research on any product to feel very independent from a funding source," she said. "(Corporate funding has) already gone too far in my opinion."

Swanson said she would prefer that a college president have more of an arms-length relationship with a corporation that is petitioning to use university resources and research facilities.

"Ethical dilemmas arise when there is a conflict of interest, and that's why we want more independence in situations like this so that we have the utmost transparency without any pressure from vested interests," Swanson said. "If a research project does not seem to be in the public good or a product maybe should have more scrutiny, but the stock price will go up if it's hurried to market, then that person who is sitting on the board has a built-in incentive to weigh in more on one side than another.

"That's why a lot of companies want that person sitting there. It's a cozy arrangement."

Monsanto documents submitted to the Securities and Exchange Commission show the company has given SDSU about $367,000 in research grants and paid about $54,000 to the university for services since the 2008 fiscal year. Also, SDSU paid the company $216,000 for licenses, services and goods. The $1 million payment for a plant-breeding fellowship came in March.

"In the ordinary course of its business, the company has engaged in certain transactions with SDSU that were, or may be, related person transactions with respect to ... Chicoine," the document said, referring to the above business relationship.

Tad Perry, executive director of the Board of Regents, said it is common for presidents at major universities to become board members of private firms. He said there are policies in place to govern any potential conflict of interest.

"There is a policy and he expects to comply with the policy," Perry said of Chicoine.

University of South Dakota President Jim Abbott is a member of Home Federal Bank's board of directors in Sioux Falls. Abbott said the bank does not disclose directors' compensation.

Perry said the university benefits from the knowledge an official gets through involvement in private industry.

"Universities benefit from the knowledge in the real world and better interface activities with the world we are trying to serve," Perry said.

The University of Nebraska and the University of Minnesota do not prohibit service on a business organization's board of directors. North Dakota State University deems serving as a director of a company an activity with minimal-to-moderate potential for a conflict of interest, requiring review and approval. Both are land-grant universities

The Iowa Board of Regents requires university officials to remain free from the influence or appearance of any conflicting interests in acting on a university's behalf. Such interests include service on the board of directors of an organization that has or might have a relationship with an institution.

Chicoine's background in agriculture and as an agricultural economist appealed to Monsanto's nominating committee, Stuart said. He has a Ph.D in ag economics.

The committee reviews each candidate's qualifications and makes a determination on his or her independence based on New York Stock Exchange standards.

"We are thoughtful in our selection process," Stuart said. "We look at a broad range of skills, experience and viewpoints. We have gone through due diligence to assess independence when we made this decision."

Chicoine can't vote on SDSU matters As a board member, Chicoine must abstain from any votes on SDSU, Stuart said. Matters such as research initiatives — even seven-figure fellowships — do not come before the board, she said.

While Chicoine served as a College of Agriculture dean at Illinois, he said he served on the board of John Werner Bank for 10 years, ending in 2001, and earned hundreds of dollars a year.

Chicoine met with SDSU's Academic Senate last week. Doug Malo, Academic Senate president, said concerns centered on the ability of research scientists to be honest and impartial. They questioned whether the scientists would be able to publish findings that may not be complimentary to Monsanto.

"(Chicoine) mentioned that we will not enter into any agreements where we do not have the freedom to publish and share our findings with the public," Malo said.

The Academic Senate will monitor the situation as long as Chicoine is on the board, he said.

Shawn Mohr, a student senator for the College of Agriculture and Biological Sciences from Clark, co-sponsored a resolution to oppose Chicoine's seat on the Monsanto board. The Students Association narrowly voted against the measure. He said students were concerned they wouldn't be pursued as heavily by other agronomic companies.

"This appointment to the board of directors for Monsanto will make our research seem tainted, to the producers, other agricultural companies and counterpart universities," he said. "Even if all the facts say differently, the public may think the Monsanto connection is affecting SDSU's decisions or research."

Chicoine and Kevin Kephart, vice president for research, said SDSU's research will continue to be independent, and the school will maintain its credibility in this area. Kephart said he signs research contracts with corporations, not Chicoine.

"We are going to carry forward and direct research activities in a scientifically objective manner," Kephart said.


Information from: Argus Leader, http://www.argusleade

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