President John Hennessy further expanded his reputation and his wallet last week when Qualcomm, the world’s largest maker of mobile-phone chips, agreed to buy Atheros Communications, which Hennessy co-founded, for $3.1 billion in cash.
In a statement, Qualcomm said Atheros investors will receive $45 a share and the transaction will close in the first half of 2011. Hennessy holds 32,899 shares of Atheros, according to a company filing, positioning him to earn $1.48 million from the acquisition.
The deal is the most recent manifestation of Hennessy’s reach in Silicon Valley. In 1984 he co-founded MIPS Computer Systems, a microprocessor developer that went public in 1989, was acquired by Silicon Graphics in 1992 and then spun off in 1998. After helping found Atheros in 1998, he joined Cisco’s board of directors in 2002 and then Google’s board in 2004. The positions pay him well — Forbes reported that Hennessy earned $331,000 from Cisco last year, $497,156 from Google in 2009 and $86,000 from Atheros in 2009.
Stanford paid him $702,771 last year, according to a report by The Chronicle of Higher Education.
In an interview, Hennessy, who came to the presidency in 2000, said the multiple roles he plays in Silicon Valley have given him valuable insight into presiding over Stanford.
The relationships he has built with leaders in the valley, he said, provide him “a network of people to call” when he faces a challenge or problem that one of them has faced. His experience in starting companies taught him “general management principles” that, for example, guided him through the process of laying off University employees during the height of the recession in 2009.
“I’d had to go through a similar situation with the first company I started,” said Hennessy, 57. “For large organizations, change is a very hard thing. So you can learn in a smaller company how to deal with that kind of change.”
As a director at Cisco and Google, Hennessy said he has learned how to build and balance large budgets — Stanford’s is nearly $4 billion — and how to recruit talent to Stanford and retain its roughly 11,000 employees.
“They are important background experiences because as president you face similar kinds of challenges,” he said.
Gerhard Casper, Stanford’s ninth president, isn’t surprised his successor is so closely affiliated with multiple global corporations.
“The president of Stanford is, almost by definition, an international figure,” Casper said in an interview in his office on campus, where he leads Stanford’s arts initiative and sometimes teaches.
As president, Casper took several opportunities to address, in talks around the world, the issue he calls closest to his heart: higher education. Today Casper is a trustee of the Central European University in Budapest, an emeritus fellow of the Yale Corporation and an emeritus trustee of the American Academy in Berlin. He is also an elected member of the American Law Institute (he carries a copy of the U.S. Constitution with him at all times).
“When I stepped down [as president of Stanford], I was obviously free to do things I could not do previously simply because of time restrictions or conflicts of interest,” Casper said.
Though Casper has always been “wary” of compensated board positions — he serves his roles in a pro bono capacity, he said — he called Hennessy’s affiliations different because they don’t impose time pressure on his duties as president. Hennessy said he has turned down “lots of boards that would require travel” because he couldn’t afford the time.
On a board, a university president is no different from any other director, says James Finkelstein, a professor at the George Mason School of Public Policy who, for 15 years, has studied the role of university presidents serving on corporate boards. “We’ve never found a president to have attended less than 75 percent of the meetings of a corporate board,” Finkelstein said.
He has studied 132 top research and academic universities and found that 35 percent of the presidents serve on one or more boards of publicly traded companies.
Though the insights Hennessy has gained from Silicon Valley have helped him manage and direct Stanford, he misses two things in which he hopes to engage more after he steps down: interacting with students and being involved in a small start-up company.
“I’d like to be back on the faculty teaching,” he said. “That’s my first goal.”
As to whether he has given any thought to when he will step down, Hennessy replied, “Not yet.”