How our money’s invested The following description of UT’s holdings is reprinted from the April 29 Daily Texan: More than 100 different securities are routinely administered by the Office of Investments, Trusts, and Lands, if “routine” can be said to apply to investments totaling more than $541 million for the 1969 fiscal year. University stocks are a diversified lot, ranging from Allied Chemicals to Xerox Corporation, from Coca-Cola to Clorox. Most of the major oil companies are represented, including Gulf, Mobil, Shell and Texaco. Insurance companies American owned by the University. These stocks are part of the University Permanent Fund. The fund was established in 1876 under the Texas Constitution, which granted an initial 1.2 million acres of land from the public domain to finance facilities. In 1969 the Permanent Fund owned 2.1 million acres of land in 19 West Texas counties. Most of the land is under grazing leases. About one-third of the land is under oil and gas leases a major source of royalty ever since the Santa Rita No. 1 blew in back in 1923. The income from stocks and securities in the Permanent Fund, known as the Available Fund, is the chief source of revenue for university construction. Thus, the decision to build new classrooms on the university campus depends in part on the Dow-Jones Industrial Average. established policy of always voting with management. In addition, he indicated in no uncertain terms that public directors had no place on the GM Board where they would merely interfere with the operation of the company. Executive Vice Chancellor for Fiscal Affairs E. D. Walker affirmed Shelton’s statement of the University’s general policy on these matters. Walker stated that any deviation from the established practice could be made only by the Board of Regents. Easley and I applied for and were granted an appearance before the Regents at their April meeting in Austin. MEANWHILE, SIMILAR advances were being made by Campaign GM representatives at many other educational institutions. At Harvard, student response was so overwhelming that the administration was forced to withdraw an initial declaration that Harvard proxies would be voted with management. At Michigan, students demanded and got assurances that shares would be voted in accord with the results of a student-faculty referendum. GM management sent a representative to debate a Campaign GM member before a faculty-student council at MIT. The council requested that MIT stock be voted for the Campaign GM proposals after the debate. At least one University of California regent publicly endorsed the proposals. Editorially, the Washington Post and the Detroit Free Press urged support of the movement. In advance of the Regents’ meeting, a memorandum stating the position of Campaign GM with specific regard to the UT shares was submitted for distribution to members of the board. The essence of the document was that the university, as a state institution, invests funds only in trust for the public and could not, therefore, close its eyes to the social costs of its investments. The university could not consistently espouse the highest academic ideals on the one hand while sharing in the profits of these detrimental activities on the other. On the day before the meeting, the university newspaper, The Daily Texan, ran an editorial describing and endorsing the campaign. American Petroleum Institute president Frank Ikard, also chairman of the Regents’ Land and Investment Committee, introduced us to the meeting of the Regents. Easley carefully detailed the proposals and outlined the broad and overriding social and ecological implications inherent in the decision to be made. I described the effects of the decision on the university itself, attempting to allay both the fear that a vote in favor of these proposals would constitute a precedent for open debate on all future proxy votes regatd less of their nature and the fear that passage of these proposals would result in reduced profits for GM and consequently reduced revenues for the University. After listening to our 15 minute presentation, Mr. Ikard questioned us for about five minutes regarding the actual instigators of the campaign \(the coordinators of the proxy solicitation were named in the material distributed prior to university’s policy of either voting with management or selling the stock if confidence was not warranted. The regents then, without discussion, unanimously rejected the Campaign GM proposals, In a Texan interview some days after the vote, Regents Chairman Frank C. Erwin, Jr., explained that it is the board’s policy to vote with management because the board administers university stocks technically owned by the Texas Legislature. “Since too many opinions are involved in how to vote, such publicly-owned securities, the board cannot afford to engage in proxy fights,” Erwin said. According to the Texan, “The Regents administer the stock within the so-called `prudent man rule.’ The rule, common to most states, requires trustees of public securities to act as would a ‘prudent man’ in the administration of their duties . . . If the regents lose confidence in a certain stock, they simply sell and buy another.” The summary dismissal of the GM issues by the Regents is disappointing on two levels. Most grossly, the university as a whole was deprived of what may be its most effective weapon in the battle to save society and the environment. Judicious use of the economic power inherent in investment decision making on the scale involved here could have a significant impact on corporate behavior, particularly when, as here, there is coordination between many institutional investors. On a somewhat less visible level, too, the rejection of the Campaign GM proposals is disillusioning. Campaign GM at the University of Texas was an attempt to make the system work. Great care was taken to work through channels and pursue administrative remedies properly. In the final analysis, our proposals were cast aside having been afforded none of the open consideration by the university community they so clearly deserved. Vice-Chancellor Walker has sent us a letter praising us for putting forth a rational and intellectual student proposal \(and by implication suggesting that this is preferable to the interpret the regents’ resounding rejection as equivalent to a deaf ear on their part \(and by implication suggesting that their rejection does not mean that we are left only response is “Why not?” May 15, 1970 13 ATHENA MONTESSORI SCHOOL Leo Nitch, Director NEW NORTHWEST LOCATION 7500 Woodrow Phone 454-4239 #rip i z’ Since 1886 The Place in Austin GOOD FOOD GOOD BEER 1607 San Jacinto GR 7-4171
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