University of Minnesota President Joan Gabel announced Monday that she would resign from her position on Securian Financial's board of directors.
Describing the last several weeks as "extremely painful for me" and "very uncomfortable for you," Gabel informed the university's Board of Regents that she would no longer serve on the board for Securian, which has more than $1 billion worth of business with the university.
Her decision came after multiple high-profile officials — including the governor and state attorney general — expressed concerns about the arrangement and after Regent Darrin Rosha asked his colleagues to call a special meeting to consider rescinding their decision to allow Gabel to serve on the company's board.
"This distraction is unfortunate, as my appointment to the Board of Securian would only expand the University's important networks and outreach," Gabel wrote in her letter. "However, out of respect for the institution and to eliminate any further distraction of our work, with a heavy heart, I will be resigning my Securian Financial directorship effective immediately."
The university pays about $4.6 million each year to the Minnesota Life Insurance Co., a Securian Financial affiliate, to cover basic life insurance for its employees. The U transferred its retirement plan administration from Securian to Fidelity a couple of years ago but still has about $1.3 billion in "legacy business" with Securian, according to a letter written by leaders of the university's Conflict of Interest Program and Institutional Conflict Review Panel.
The U's Board of Regents voted last month to allow Gabel to take a paid position on the company's board if she agreed to terms to manage a conflict of interest. Among other things, the plan required Gabel to recuse herself from decisions on contracts involving the university and Securian Financial or its affiliates.
Gabel is set to earn about $1 million from the university each year. She told regents the position on Securian's board pays about $130,000 per year — though in her letter on Monday she said she "voluntarily waived the directors' compensation" and has "not received any benefits."
"I have previously been persistent on seeing this board appointment through because we faithfully followed the University's policies, negotiated appropriate contract terms, and had full public approval that put the institution first," Gabel wrote.
She wrote that some other university presidents also serve on boards for other companies and that she believed it would be an honor to serve on Securian Financial's board.
"I firmly believe that our conflict management process works and that the plan we developed for my service fully protected the University," she wrote.
Some regents, including Rosha, who voted against the arrangement the first time, said they didn't feel the conflict could be managed. Along with law professor Richard Painter and former Gov. Arne Carlson, Rosha asked the U.S. Securities and Exchange Commission and the Minnesota Attorney General's Office to investigate.
Rosha also called on his colleagues to hold a special meeting to reconsider the deal. The board hadn't yet announced whether it would honor his request.
In an interview Monday night, Rosha said he was still reviewing Gabel's letter, but "I support the result." He said he believes the board still has work to do because the "episode has raised a number of significant matters from a governing board perspective."
Rosha said he wants to review past contracts and to take a deeper look at the university's conflict review panel, which includes members who report to Gabel.
"A panel that reviews matters of this nature should not contain subordinates to the person subject to the review," he said. "While that might work for the vast majority of university employees, it creates a conflict when you're at this level."
In a statement Monday, the Board of Regents said it welcomed Gabel's decision to resign from Securian Financial's board — saying it "serves the public interest and reaffirms the President's unwavering commitment to advance the mission of the University of Minnesota."
"We have been in discussions with the President this past week as to how to appropriately address the circumstances to respect the interests of all concerned, especially the University and the public," the board's statement said. "President Gabel's decision to resign from the Securian Board resolves those concerns and we appreciate her willingness to do so."
Jeff Bakken, a spokesperson for Securian Financial, said the company respects Gabel's decision: "This was her personal decision, and we honor it."
He added: "Ms. Gabel was a strong addition to our governance team, so we are disappointed that she will not be able to continue her service."
Staff writer Louis Krauss contributed to this report.