The Importance of Board Independence
The possibility that Elon Musk will take Tesla private raises some interesting issues of corporate governance and oversight with possible implications for the future of independent and international schools (see this piece in the Financial Times). The specific issue is with the independence of board members, and the challenge in the Tesla case is that so many of the nine directors have close ties to Musk; indeed, some are relatives and business partners.
We have long been concerned about the lack of independence on private school boards. Members are conflicted by being tuition-paying parents, friends with each other (and their children are friends of other members’ children), alumni or relatives of alumni, and sometimes even spouses or partners of administrators and teachers. In international schools, expatriate board members and teachers frequently socialize outside of school as co-members of the same local community. While these conflicts are inevitable because were it not so most day schools probably wouldn’t be able to populate their boards, it does present issues when the board discusses a range of topics:
- Tuition
- Faculty Compensation and Benefits
- Constructing New Facilities
- Mergers and Acquisitions
It is this last area, mergers and acquisitions, that seems connected to schools and a likely future scenario for many. So far, the independent and international school sector has been slow to embrace either mergers or acquisitions, but a few are happening (see this example) and we believe more are in the cards. Boards need to have open, honest discussions, free from conflicts of interest, about whether the best scenario for a school's future is solo or combo. It is the chair's job to create the space for such deliberations and monitor the level of discourse as it happens.
NOTE: Triangle is facilitating an E.E. Ford Foundation-funded "summit conference" a variety of collaborative models for ADVIS, the Association of Delaware Valley Independent Schools, October 17, 2018, near Philadelphia. Write us for more information.