MEMORANDUM

December 9, 2005

On Monday, December 5, 2005, Chairman of the Board Gary Abramson, trustee Robyn Mathias, and I met in a series of dialogues with campus constituent representatives to discuss the work plan of the Governance Committee, which is comprised of myself, Mr. Abramson, Jeff Sine, Regina Muelhauser, and Bishop John Schol. The committee receives counsel from Vice President and General Counsel Mary Kennard and Martin Michaelson, partner in the law firm of Hogan & Hartson LLP and long-time counsel to the university. The committee wanted to hear suggestions about the work in which the board will be engaged and what issues the Governance Committee should be considering as it moves forward.

At their meeting with the Governance Committee members, the deans indicated that they had developed five basic principles of governance, which the Governance Committee felt were consistent with the committee’s stated objectives. The principles include:

1. Integrity
2. Transparency
3. Accountability
4. Engagement
5. Legitimacy

Many participants encouraged the board to accept as its highest priority the recruitment of capable and highly committed new board members. There was also discussion concerning the board’s intention to further its goals of creating diversity on the board, a principle which extends to the diversity of expertise and experience of its members. The board will be looking to all constituent groups for appropriate trustee nominations. Nominations with biographical information may be sent to Interim President Kerwin for dissemination to the board’s Trusteeship Committee. The current set of criteria for trusteeship will be placed on the Web. Nominations should clearly describe how the nominee’s character, background, and experience satisfy the criteria for new trustees.

It is anticipated that the Trusteeship Committee and the board will carefully screen nominations and then develop a slate of candidates that will be reviewed and approved by the General Board of Higher Education and Ministry of the United Methodist Church before submission to the full AU board for its vote in May 2006 and at subsequent meetings of the Board of Trustees.

Consistently expressed throughout the meetings was the strongly held sentiment that the university has the very real opportunity to establish itself as a model for institutional governance among colleges and universities.

The sentiment was also expressed consistently that the community is seeking increased accessibility to and visibility of the Board of Trustees throughout the life of the campus. The opportunity to meet and participate by providing input in processes such as a presidential search process and governance is viewed as significant. Increased communication by the Board of Trustees concerning the processes and activities in which we are engaged was viewed positively. Specifically, the decision to post the letter from trustees Gary Abramson and Tom Gottschalk to the Senate Finance Committee was praised (for the text of our response, go to www.american.edu/governance). There was clear interest expressed in having access to as many of the underlying documents comprising the submission as would be permissible. We are committed to continuing efforts to communicate regularly with the community in various media including the Web site, electronic mail, and in person meetings.

Some in attendance expressed their desire to establish a degree of comfort with the board’s selection of external governance consultants. All present were encouraged to identify appropriate consultants from whom the board might solicit proposals as well as to provide feedback with respect to those consultants under consideration by the Governance Committee.

In this regard, the board will be evaluating the ability of external consultants to assist us with:

1. Self-assessment of the board
2. Revision of board policies, procedures, and bylaws
3. Examination of the issues of board diversity, composition, trustee giving, recruitment, and retention
4. Establishing expectations for the next president of the university

To date, members of the committee have spoken with or reviewed responses from the following organizations: American Council of Trustees and Alumni’s (ACTA’s) Institute for Effective Governance, American Council on Education (ACE), Association of Governing Boards of Universities and Colleges (AGB), BoardSource (formerly the National Center for Non-Profit Boards), National Association of Corporate Directors (NACD), and Plexus Consulting Group, LLC.

It appeared that there was consensus throughout the meetings that the process of examining governance is important in and of itself. Many in attendance expressed their position that achieving appropriate results outweighed the need to meet a May 2006 “deadline.” We are mindful of concerns with time and process and will commit to engaging in a thoughtful and thorough process.

The board will continue to seek input from the university’s constituencies. To the extent that interested parties have or will submit suggested modifications to the bylaws for the board, it was suggested that such suggestions be accompanied by a rationale for the proposed modification.

Attendees consistently expressed their desire to meet again, if possible in January or February, and their appreciation for the opportunity to have a frank exchange of ideas. The Governance Committee is truly grateful to the groups and their representatives who committed time and energy to meeting on Monday and providing valuable input for our consideration.