The city's most powerful man got the Statehouse to rewrite laws that allowed him to return to Ohio State's board of trustees. Now there's plenty of speculation on what that means for OSU president Karen Holbrook.
(This story originally appeared in the April 2006 issue.)
Les Wexner figured critics would say he’d used his enormous influence at the Statehouse to change the way Ohio State University makes appointments to its board of trustees. After all, the CEO and founder of Limited Brands is among the nation’s richest people and a major campaign contributor to the Republican party, which controls state government. And it just so happened that one of the newly created board seats went to Wexner, even though he’d spent months denying any interest in the position. So he realized it was possible he’d get accused of manipulating the process. “I knew people would say that,” Wexner says. “Not a fuss for me.”
But when somebody did say it—in this case, the editorial page of the Toledo Blade—Wexner got ticked off. After reading the paper’s claim that his return to the OSU board was “naked political patronage,” the billionaire called the Blade to complain.
He told a newspaper editor there that Gov. Bob Taft had done “a courageous thing” in picking himself, former BF Goodrich CEO John Ong and Procter & Gamble executive George Cloyd for the OSU board. “Yes,” Wexner recalls saying, “he appointed three Republicans. But he did not appoint three Republican dumb-asses.” Wexner went on to point out the $25 million he’d donated to OSU’s Wexner Center, the $20 million he persuaded the late Detroit industrialist Max Fisher to give to the business school and the $100 million overall he’d helped raise for the university. “If that makes you a fat cat,” Wexner told the Blade, “then that makes me the fattest cat.”
Wexner clearly is feeling a little underappreciated. But he probably shouldn’t be. The Blade’s criticisms aside, his return to the board, on which he served from 1988 to 1997, is being widely praised. The two provisions that paved the way for Wex-ner’s return became law last year with hardly any opposition. (They allowed former trustees to be reappointed and added six new members.) OSU president Karen Holbrook, who would be excused for feeling a little nervous about Wexner’s reappointment, officially supported the changes. Even the Statehouse’s most partisan Democrats have described Wexner as a highly qualified trustee.
State Rep. Chris Redfern, who also is chairman of the Ohio Democratic Party, introduced a bill that would prevent political donors from receiving gubernatorial appointments within a year of their donations. However, Redfern noted he didn’t propose this legislation because he thinks Wexner—who has given more than $65,000 to Taft’s campaigns over the years—does not belong on the OSU board. “I’m just trying to save the guy a few extra bucks,” Redfern says with a grin. “If I were governor of the state of Ohio, I would appoint Les Wexner to the board of trustees for the Ohio State University.”
Taft did just that Dec. 30, even though people close to Wexner had been saying he would decline the offer. “I never heard Les indicate an interest in going back until the governor was actually making decisions about the new trustees,” says Bob Milbourne, president of the Columbus Partnership, the city’s official power club that’s chaired by Wexner. And Wexner told Columbus Monthly in September he had no intention of returning. Many observers figured he would use his influence to stack the board with his loyalists, such as New Albany Company chairman Jack Kessler and attorney Alex Shumate.
Why did he change his mind? “It truly is not a job I wanted,” Wexner says. In fact, he says when Taft first called him about it, he told the governor, “Been there, done that.” But Wexner says his wife, Abigail, persuaded him to reconsider, saying, “You care too much about it. Just figure it out. It’s a responsibility you can’t avoid.” So Wexner says he called Taft back and accepted the six-year appointment.
Wexner says Ohio State is on the right track, but that’s not to say he doesn’t have complaints. Without directly criticizing Holbrook, he says he thinks the board four years ago chose an unqualified person as university president. On that point, there is no shortage of speculation about whether Wexner is motivated by a desire to see the end of the Holbrook administration—speculation he hasn’t convincingly tried to end.
He also likes a challenge, and figuring out how to fund a huge public university in a time of shrinking state budgets certainly falls under that category. And the theory that perhaps makes the most sense about Wexner’s return is the simplest one: He believes Ohio State will be better off if he is involved and even in charge.
“I think he can add a lot to Ohio State,” Milbourne says. “He really cares a lot about the future of Ohio State and wants to help, and that’s his motive.”
During his first stint as an OSU trustee, Wexner played a big part in persuading Gordon Gee to take the president’s job in 1990. Then, when Gee was wooed by the nine-campus University of California system in ’95, Wexner’s influence helped to keep him from making the jump. In fact, it was the year after Wexner’s departure, 1998, that Gee finally did leave for Brown University.
However, Wexner was known to miss trustee meetings, and when he became board chairman in May of 1996, the Dispatch reported he’d skipped half the meetings between ’90 and ’95, more than any other sitting trustee. The OSU chairmanship has been a going-away present to the board’s longest-serving member. “It is a funny process of selection,” Wexner says. “The leader is not the leader, just the most senior member.” Consequently, each board chairman spends the year as, essentially, a lame duck. He says he’d been approached earlier in his tenure about changing the system and becoming chairman for two or three years. But he turned it down, determining he was too busy with his family and business.
So Wexner served the one year as chairman, and that was publicly marked by what the board didn’t accomplish. It didn’t act on a hot-button proposal to add domestic-partner benefits to the university’s health plan. Although Gee supported a proposal from student government to offer such benefits to students’ unmarried live-in partners, Wexner declined to bring it up for a vote. A version of the plan finally passed in 2004 under Holbrook and board chairwoman Tami Longaberger.
Some who know Wexner believe he now realizes he could have done more with his time on the board—a key factor in his decision to come back. Wexner himself doesn’t express any regrets about his first term, but does acknowledge his relatively poor attendance. “A lot of the work, the heaviest lifting, is done in the committees, which is less visible,” he says. Though he predicts he still will have occasional scheduling conflicts, he promises, with apparent mock sheepishness, “I’ll do better.”
One reason he’ll try to do better is that Wexner didn’t like everything the board did when he wasn’t on it. Specifically, he questioned the choice of Karen Holbrook. When the current president was chosen in August of 2002, sources say Wexner was someplace he wasn’t used to and didn’t like: out of the loop. Not only hadn’t Wexner been consulted, but he also didn’t like the fact that OSU’s new leader never had run a university as a president. Rather, she’d been the provost at the University of Georgia.
After Holbrook’s tenure got off to what was widely viewed as a rough start, Wex-ner was said to be among those muttering that the OSU trustees had made a poor selection. Some people viewed as close to Wexner have poor-mouthed Holbrook, and sources say some of Holbrook’s supporters, including Dispatch publisher John F. Wolfe, have wondered why Wexner has a problem with her.
In interviews with Columbus Monthly, Wexner has done nothing to dampen the speculation. Asked if he was initially dissatisfied with Holbrook, he pauses for several seconds before evading the question. “She and I met monthly—thought it would be helpful in her understanding the community,” he says. “I think that was being supportive.”
Speaking of her first year or so as president—in which she was criticized for being tone-deaf to the school’s culture and losing some well-regarded personnel—Wex-ner alludes to Holbrook’s lack of experience. “Gordon told me that the first two years nearly killed him,” says Wexner, referring to Gee, who had been the president at West Virginia and Colorado universities before coming to Columbus. “Karen had never been a president before—an enormous leap. I’m sure it nearly killed her. Such a big job.”
He does compliment Holbrook, but his praise hardly can be called effusive. He says she “seems comfortable now,” and points out that the “quality of leadership” at OSU has improved. “She has selected and brought good people to the university,” he says. About the issue of a contract extension, he tries to avoid the topic by saying he hasn’t given it much thought. When pressed, he says, “If she wanted to stay a year, I don’t think that’s a good idea. She would sign up to be a lame duck.” And if she wanted to stay longer? That would depend on “terms and things,” he says. In other words, he won’t be begging Holbrook to stay, as he did with Gee.
As for Holbrook herself, she says she thoroughly enjoys her relationship with Wexner and views him as a valuable resource for the university. In an interview last November, Holbrook aimed to debunk the rumor of Wexner’s unhappiness with her performance by producing a fax from the billionaire. It was a copy of a news story about Ohio State’s being recognized as a top research school by the National Science Foundation. On the fax was a handwritten note from Wexner: “This is a big deal!”
It was Larry Householder who initially paved the way for Wexner’s return to OSU. As the speaker of the Ohio House of Representatives in 2004, he directed the House finance committee to insert a provision into a loosely related Ohio Senate bill to allow technical colleges to build housing and dining facilities. Householder’s rider would reverse a 1973 law signed by then-Gov. Jack Gilligan that prohibited anyone who’d served as many as six years of a nine-year term on a state university board from being reappointed. Householder’s proposed change would let a former trustee serve again after four years off the board. The legislature passed the bill late in 2004.
Householder, now Perry County auditor, largely has avoided the press since leaving the speaker’s office under a cloud of scandal and did not return calls for this story. However, he told the Dispatch in January 2005, when Taft signed the bill, that he’d been told Wexner wanted the ’73 law revised. Householder said he consulted Wolfe, a close Wexner ally, before initiating the change. “If you have someone who’s been a valuable member of the board of trustees, it seems a shame that they can’t ever serve again,” Householder told the paper. “These are people who really care about schools and education, but can’t be reappointed.”
Wexner’s next goal was to increase the size of the board. OSU had nine trustees, which put it below the national average of 13—and well below Penn State’s whopping 32-member board. Wexner’s principal argument was that a larger board would be more likely to have a wider range of expertise.
“The question became: Do we have the right skill set on the board?” says Milbourne. “Half of the university is the medical center, hospitals and the medical school itself. And wouldn’t it be good to have somebody on the board who knows something about academic medicine?” The same goes for technology, finance and other issues, he says. “When you start looking at all the skills you’d like to see on the governing board, it sort of dawned on everybody that a board that was larger than nine would make some sense.”
But would it make sense to the Holbrook administration? Trusteeship magazine published a story in its November 2004 issue authored by Penn State president Graham Spanier and board chairwoman Cynthia Baldwin. The piece advocated for increasing trustees in part to avoid those that are controlled by narrow agendas. “Bigger is better,” Graham and Baldwin wrote. “Public boards should have no fewer than 12 members; 18-24 is ideal.”
But the authors went on to say that not everybody will agree that bigger is indeed better. “A broadly representative board does not, however, necessarily make things easier for a president; it takes more effort to win all sides to the administration’s point of view,” Graham and Baldwin wrote. “The upside of this, of course, is that it forces the administration to articulate more clearly its vision for the university.”
Holbrook was in a tough position. Co-lumbus’s most powerful person—thought to be, at the very least, skeptical of her administration—was leading a movement to change the dynamics of the governing body to which she answered. And the change he was advocating could inherently make her dealings with the board more difficult. On the other hand, she agreed that larger boards made for stronger universities.
Ultimately, Holbrook supported Wex-ner’s cause, but disagreed on the number of new members and how quickly they’d be added. Wexner and the Partnership wanted more sooner; the administration preferred fewer later. Eventually, a compromise was reached: The board would expand to 15 members, but not immediately.
Wexner quietly dispatched Milbourne to lobby the legislature last spring, and Ohio Sen. David Goodman of Bexley agreed to be point man on the effort. With Steve Stivers, a national guardsman, serving in Iraq at the time, Goodman was Franklin County’s only Republican in the Senate. Goodman is a Wexner ally who last year helped a holding company associated with Limited Brands buy the North-east Career Center from Columbus Public Schools for $9.83 million. At the district’s request, Goodman sponsored a law that allowed the sale of the property adjacent to Wexner’s Easton shopping complex to bypass the competitive bidding process.
Goodman says he was a natural to spearhead an OSU issue because he had chaired the higher education finance subcommittee when he was in the House. Milbourne convinced him that adding trustees would expand the OSU board’s areas of expertise. “It was that we could potentially put more folks with more abilities—with special abilities—on the board,” the senator says. “At some point, you can have too many captains running a ship, but there’s a good number of folks who can be utilized to lead a university of that size.”
Serving on the Senate finance committee in place of the absent Stivers, Goodman sponsored language in the biennial state budget to add the six trustees. Selling his fellow lawmakers on the idea was not particularly difficult, he says. “I don’t believe there was any opposition to it,” Goodman says. “There were some people who were concerned, who represent other universities, who were wondering, ‘If Ohio State University has more trustees, why can’t we have more trustees?’ ”
But Goodman convinced skeptics that OSU’s size and the role it plays in the state’s economic picture make it unique. Taft signed the budget, Goodman’s provision included, in June. Three members would be appointed by January 2006 and three more would be added by May.
But there were skeptics. The Blade published an editorial headlined “Packing the OSU board” on Dec. 4. “What prompted the expansion of the OSU board is not entirely clear, but a news report out of Co-lumbus indicated that it was pushed by billionaire retail magnate Les Wexner, a former OSU trustee who may be interested in getting back on the board,” the editorial said. “The Republicans know their monopoly on state government will be in jeopardy next year. They know money wins elections. So why not expand the OSU board and offer all those extra seats to wealthy—and grateful—political friends?”
At the time it seemed as if the Blade was misinformed about Wexner’s motivations. But by the end of the month, Taft had named Wexner. The Blade’s editorial board was indignant and published a second editorial. “The perception that these are perks for past and future favors can’t be ignored,” declared the Blade under the headline “Governance for sale.” The newspaper noted that Wexner and fellow appointee Ong “have between them donated more than $1.3 million to causes and candidates of the GOP.” Their appointments proved that increasing the OSU board’s size was “nothing more than an excuse to reward more high-rolling contributors than previous law allowed.”
The Blade approvingly quoted Demo-cratic Ohio Sen. Marc Dann of Youngs-town saying “everything is for sale” in state government. But Dann himself says he favors the Wexner appointment. “I think Les Wexner is a person who has demonstrated loyalty to Ohio State University and has been willing to use his political clout to advance the interests of the university,” says Dann, an Ohio attorney general candidate who has made a name for himself criticizing cozy relationships between politicians and their donors. “I think what we need on boards of trustees is more Les Wexners—people who are willing to put their loyalty to the institution ahead of even their loyalty to the governor that appointed them.”
At any rate, it was this second editorial that prompted Wexner to call the Blade. Wexner says he told the editor he is “very proud to have graduated, benefited and helped the university. You should be congratulating the governor and the legislature for expanding the board.”
Though he says he was “polite, not mad” during the phone call, he still sounds irritated by the editorial, which he dismisses as “populist crap.” And Wexner says he doesn’t understand why the appointment would be considered a “reward.” After all, trustees receive no compensation, and the perks would be negligible for a person of Wexner’s wealth and stature. Trustees are reimbursed for business travel, may buy football and basketball tickets, receive four free passes to the Ohio Stadium suite for home football games, can join the university party for postseason tournaments and receive free campus parking. “Big paying job,” Wexner says sarcastically. “They tripled the salary.”
As Wexner attended his first OSU board meeting Feb. 1, he looked around the room to survey his fellow trustees. “We are not a very diverse group,” he says. “Not by age, by gender, by race. Two females and one African-American.” Wexner is hopeful the board will be more diverse after Taft appoints the next three trustees this spring—and a fourth to replace board chairman Dan Slane, whose term expires in May. Wexner mentions two former board members—Longaberger, the female CEO of Longaberger Company, and Shumate, who is black—as good choices. He also puts in a plug for his old friend Kessler, who would be another white male.
While it is uncertain such Wexner allies will be chosen to join him on the board, it is easy to predict that the billionaire himself will chair the board sometime in the near future—and not just for the 12 months prior to his exit. The current system of choosing a chair is sure to be scrapped. “You can no longer do that because now you have more than one person coming to the end of their term in the same year,” says Milbourne. “So that will need to be changed.” If he does become board chairman, Wexner watchers will be interested to see which management style he employs. For example, Wexner understands he can’t micromanage Ohio State—as he has been criticized for doing with his retail businesses—but some wonder whether he’ll be able to help himself.
Wexner doesn’t offer specifics, but says he’d like to see more partnerships such as that between OSU and Battelle, which are collaborating on a science research center inside the old downtown Lazarus building. Wexner also wants to focus on ways the university can contribute to the state and local economies, and he thinks OSU can figure out ways to have its students working in Ohio after graduation rather than fleeing to another state. “It’s a big damn issue,” he says. And he talks a lot about the board’s role in recruiting new members and also how it thinks about what it does.
Then, of course, there’s the matter of choosing a new president, which is almost a certainty during Wexner’s watch since observers both within and outside the administration doubt that Holbrook—if she does stay—will want to re-up for another five years. While not clear on his stance on Holbrook, he sounds firm about the specifics of choosing the next president. He says the board will need to determine the university’s most pressing shortcoming and select a candidate who can address it. “Pick a president whose skills match the university’s dominant need,” he says.
One other thing: “You hope the university would recruit a president,” Wexner says, “a president at a large university.”