Albert L. Lord, Ballot Position No. 22

Lord photoAlbert L. Lord ’67 Bus

Investor, adviser
Former chairman and CEO, Sallie Mae
Washington, D.C.

Read Lord’s official bio and position statement here. (PDF download.)


1. Describe how you think the relationship between the Board of Trustees and the university president should function.

This relationship is vital to any enterprise. That burden rests more heavily on the Board than the CEO, who is always informed. History is replete with thriving organizations with first-rate CEOs and mediocre boards—not the reverse. Penn State’s history demonstrates this principal too clearly. The most respected public university in America prospered with an uninvolved and oversized Board.

Notwithstanding years of “success with honor” produced by management, when needed most our key managers were removed by the Board. This catastrophic error has been described often in all its horror. Still it must be remembered: Our Board and CEO interacted often yet neither knew the other. Communication failed; our boardroom dysfunction was exposed to the world.

No communication at any level would have stopped Sandusky’s depredations. Reasonable boardroom behavior would have minimized reputational damage. I am inclined to put this failure more on the Board than the CEO; however, both failed miserably, particularly during the months before the presentment.

The relationship among the Board members failed and its relationship with our CEO failed.  Governance experts (a burgeoning industry) believe separating the CEO/Board relationship appropriate. I disagree. Separation is counterproductive. That relationship should be open and candid. The CEO and Board are peers; they have same goals and should be equally engaged. Neither should be superior nor subordinate to the other.

Our Board and most not-for-profit Boards are oversized, impersonal and therefore clumsy. Any change that reduces Board size and demands more genuine engagement from members will improve Board.

2. What would you do to help heal the university community and to assist the university as it continues to recover from the Sandusky scandal?

The question presumes Penn State needs to heal from the Sandusky tragedy and related events; I agree. Officially Penn State, reinforced by the media, the NCAA, Louis Freeh and our Board of Trustees, has acknowledged guilt in the Sandusky matter. Our alumni disagree with this verdict; even the courts have not and may not reach a verdict. Consequently, at best we have confusion, at worst we have sadness and anger.

To heal these open wounds we first must end the apologies. Next we must officially accept, reject or complete the Freeh Report, a purposely misleading document. The report indicts PSU leadership’s behavior surrounding this incident. I agree with that obvious finding. Boardroom incompetence is a distinctly different charge than the charge that Penn State’s culture was poisonous. Until this good versus evil contrast is resolved, Penn State will reside in a purgatory imposed by mass paranoia and weak-kneed trustees.

As a trustee I intend to concentrate the Board on the Freeh Report accuracy. The trustees have treated his report as if it has leprosy, yet it stands an unanswered $8 million indictment of all of us. No serious healing will occur while the septic contents of this report remain in the wound.

3. What, in your view, are the major fiscal challenges Penn State will face over the next three years—and how should the university address them?

Fiscal issues challenge every not-for-profit institution.  The issue facing all is simple: How much longer can Americans afford the education investment regardless of the obvious long-term rewards it brings? The supply/demand balance is changing because the investment payback period grows and the tuition price tag is now intimidating. Penn State faces special challenges brought by the state’s negligible and falling funding and our fading reputation.

Penn State is no guiltier for Sandusky than Duke was for its lacrosse team’s party behavior. Yet outside Pennsylvania we are self-confessed enablers. With our reputation under duress, long-term demand for a Penn State education inevitably will ebb and so will the quality of the education we are able to deliver. Consequently we will lose pricing power and find our ability to attract academic talent—both educators and students—diminished.

My solution to short-term (3 years) fiscal pressure is to manage costs. We are fortunate to have a new president who is very cost-conscious. I will do what I can to bring years of cost control experience to Dr. Barron’s efforts. Long-term, only significant repair to our reputation will allow us to meet fiscal challenges without a decline in the value of a Penn State education.

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