CIRM Makes Formal Announcement of Thomas-Litvack Nominations

The California stem cell agency has posted its own version of the nomination of two Los Angeles men to become the new chairman of the $3 billion research enterprise.

The announcement came yesterday. The nominations were made last Friday and Monday and were covered at the time by a handful of news outlets.

The CIRM notice was a straight-forward, five-paragraph item and contained links on the CIRM web site to nominating letters and statements of interest from both Jonathan Thomas, bond financier, and Frank Litvack, a cardiologist. Also linked to was a bio on Litvack.

Nature Says CIRM Faces 'Stark Choice" in New Chairman

Nature magazine today weighed in with its story on the nominations for the new chairman of the $3 billion California stem cell agency.

Writing on the publication's Spoonful of Medicine blog, Elie Dolgin said that the CIRM board of directors faces "a stark choice over who will lead the San Francisco-based institute as it enters into its next phase" – a cardiologist or bond financier.

The piece contrasted Frank Litvack's scientific and medical credentials with the investment background of Jonathan Thomas, who is chairman of a bond investment firm, Saybrook Capital in Santa Monic, Ca.

Dolgin reported that Thomas declined to comment on his salary request, which is reportedly at the top of the $400,000 range for the part-time job. Litvack is ready to take $137,500.

Meanwhile, the CIRM directors' Evaluation Subcommittee scheduled a June 3 meeting to interview the candidates. The session will be mostly closed but there is a provision for public comment at some time duiring the meeting.

The public can attend at locations in San Francisco, South San Francisco, Coronado in the San Diego area and Los Angeles. Specific addresses can be found on the agenda.

Minimal News Coverage on CIRM Chair Nominees

The latest news coverage of selection of a new leader for California's $3 billion stem cell agency is meager, to say the least.

Absent from the game this morning is most of the major media in the state, including the Los Angeles Times, the San Francisco Chronicle and the San Jose Mercury News. The Chronicle's and Mercury's backyards include the headquarters of CIRM, not to mention the major beneficiaries of the agency's largess. Oddly, The Sacramento Bee carried a story yesterday about the third nomination of Jon Thomas for chair of CIRM but failed to report the new nomination of Frank Litvack.

Here are links to the stories that searches by the California Stem Cell Report turned up this morning: Ron Leuty's piece in the San Francisco Business Times, Kathie Worth in the San Francisco Examiner and David Sider in The Bee.

Litvack vs. Thomas for Chair of the $3 Billion Stem Cell Agency

California State Controller John Chiang today nominated Frank Litvack, a "serial entrepreneur" and cardiologist, to become the new chairman of the $3 billion California stem cell agency.

Chiang cited Litvack's deep background in medical business development and "unique combination of skills." The controller said,

"Litvack knows from personal experience what it takes to develop new medical technologies and move them through the regulatory process to adoption in the market place."

Chiang, the state's top fiscal officer, said that Litvack "has been a clinician, a researcher and an entrepreneur, who has found or led several medical technology companies."

The controller continued,

"Dr. Litvack is a strong proponent of the oversight model of governance, as I have advocated. I believe he has the executive, medical, regulatory and financing experience, as well as the leadership skills that are needed to successfully guide the ICOC (the CIRM governing board) and CIRM through this upcoming transition and onto further success in the coming years. His interest in serving as ICOC's next chair is grounded in such a strong sense of civic duty and belief in CIRM's mission of saving lives that he will serve in the position at the lowest salary being offered, irrespective of his commitment to spend whatever amount of time is necessary to work with the ICOC and CIRM management to ensure that the next chapter in CIRM's history is as successful as the first."

The CIRM board will meet June 22 and 23 in San Diego to choose between Litvack and Jon Thomas, chairman of Saybrook Capital of Santa Monica, Ca., to succeed Robert Klein, a real estate investment banker and attorney who has resigned as chair of the organization.

Thomas was nominated last week by Gov. Jerry Brown and state Treasurer Bill Lockyer. Lt. Gov. Gavin Newsom is also expected to nominate Thomas. (Later in the day, Newsom did nominate Thomas.)

By law, the 29-member CIRM board can only a elect a chairman from candidates nominated by the four state officials.

Thomas reportedly favors the current controversial dual executive situation at CIRM in which the chairman and president have overlapping responsibilities. That has lead to public conflict in the past and has been much criticized, particularly by the state's good government agency, the Little Hoover Commission. It said CIRM was personality driven.

Controller Chiang, also chair of the only state entity charged with review of CIRM and its board, last March said that oversight of CIRM is "severely compromised" when the chair is part of management.

Klein favors continuation of the existing dual executive relationship. A reliable source told the California Stem Cell Report that Klein favors Thomas, although the board's outside counsel denied that on behalf of Klein.

Litvack is disposed to more of an oversight role for the chair, a position that the CIRM board seems more inclined to support, at least as of its March meeting. The board also has designated the job as part-time – only 50 to 80 percent. The post carries a salary that tops out at $529,100. However, the board is looking at paying no more than $400,000 with a low of $137,500 because of its part-time nature.

The pay apparently is another difference between the two men. Thomas is reportedly seeking a salary at the high end of the range while Litvack would accept $137,500.

Litvack has been involved with a number of firms, most notably Conor Medsystems Inc. of Menlo Park, Ca. He was CEO when it was purchased by Johnson & Johnson for $1.4 billion. Conor was developing a new kind of stent.

Thomas' firm, which he co-founded, specializes in distressed and defaulted municipal bonds, a financial category that includes state bonds. The stem cell agency is funded virtually entirely by California state bonds. The state has the lowest bond rating of any state in the nation.

The CIRM directors' Evaluation Subcommittee is expected to meet behind closed doors soon to interview the candidates. They are expected to make a public presentation at the San Diego meeting at which time the public can make comments or raise questions.

Governor's Nomination Letter for Thomas

Here is the brief letter in which California Gov. Jerry Brown nominated Jon Thomas, chairman of Saybrook Capital of Santa Monica, to chair the $3 billion California stem cell agency.
Governor's Nomination of JonThomas

Newsom to Nominate Thomas for Chair of Stem Cell Agency

California Lt. Gov. Gavin Newsom plans to nominate Southern California investor Jonathan Thomas for chair of the California stem cell agency, according to the San Francisco Business Times.

Reporter Ron Leuty cited an anonymous source in reporting the move today in his story on the nomination of Thomas by Gov. Jerry Brown and state Treasurer Bill Lockyer. State Controller John Chiang is yet to make his nomination.

In addition to Leuty, the Los Angeles Times and The Sacramento Bee today carried stories on their web sites about the nomination. The San Francisco and Los Angeles papers both cited coverage of the matter by the California Stem Cell Report.

Here are links to the stories in the Los Angeles paper (written by Eryn Brown) and The Bee(by Paresh Dave).

Here is a link to the Lockyer nominating letter, courtesy of The Bee. We hope to bring you Brown's 56-word letter during the weekend.

Prop. 71 Requirements for Chair of the California Stem Cell Agency

Here is the text of what Prop. 71 stipulates are the legal criteria for the CIRM chair.

"The chairperson and vice chairperson of ICOC (the CIRM governing board) shall be full or part time employees of the institute and shall meet the following criteria:
(A) Mandatory Chairperson Criteria
(i) Documented history in successful stem cell research advocacy.
(ii) Experience with state and federal legislative processes that must include some experience with medical legislative approvals of standards and/or funding.
(iii) Qualified for appointment pursuant to paragraph (3), (4), or (5) of subdivision (a)(which stipulate that the chair come from 'representatives' of 'disease advocacy' groups.) .
(iv) Cannot be concurrently employed by or on leave from any prospective grant or loan recipient institutions in California.
(B) Additional Criteria for Consideration:
(i) Experience with governmental agencies or institutions (either executive or board position).
(ii) Experience with the process of establishing government standards and procedures.
(iii) Legal experience with the legal review of proper governmental authority for the exercise of government agency or government institutional powers.
(iv) Direct knowledge and experience in bond financing."

Southern California Investor Nominated for Chair of the State's Stem Cell Agency

California Gov. Jerry Brown and the state's treasurer, Bill Lockyer, today nominated the head of a Southern California bond investment firm, Jonathan Thomas, as a candidate to become the new chairman of the $3 billion California stem cell agency.

Two other state officials, Controller John Chiang and Lt. Gov. Gavin Newsom, have the ability to nominate candidates to succeed Robert Klein at the research organization. However, they are yet to be heard from publicly.

Brown's nominating letter was very brief, only 56 words, and said nothing about Thomas other than nominating him.

Lockyer's letter was a bit longer. He said,

"Mr. Thomas's experience as a public finance investment banker, attorney, board member of various government agencies, and board member of the Crippled Children's Society of Southern California, as well as his lifelong background, education and interest in biology and medical sciences, makes him exceptionally well-suited to fill the role of ICOC (the CIRM governing board) chair and to lead the ICOC into the next stages of its ongoing pursuit of cures through stem cell research."

Thomas is chairman and co-founder of Saybrook Capital of Santa Monica, Ca., a firm that specializes in distressed and defaulted municipal bonds, an investment category that includes state bonds. The stem cell agency is funded by California state bonds. The state has the lowest bond rating of any state in the nation.

Thomas is reportedly favored by Klein as his replacement, although Klein has denied that through a spokesman. Thomas reportedly supports the much-criticized dual executive structure at CIRM in which the president and the chairman have overlapping responsibilities. Klein also favors continuation of the arrangement, which is codified in state law by Prop. 71. The ballot measure, which created by CIRM, was written by Klein and a handful of others.

The chairman's job carries a salary range that tops out at $529,100. However, the board earlier this year indicated that it was looking at no more than $400,000 for part-time work (up to 80 percent). Klein, an attorney and real estate investment banker, worked without salary for a number of years. At one point, he asked for compensation. The board approved a $150,000 salary for half-time work.

The board is expected to act on the nominations at its June 23 meeting in San Diego.

Seattle Gilead Exec Is Potential Candidate for Chair of California Stem Cell Agency

A third candidate and possibly a fourth has emerged for nomination as the new chairman of the $3 billion California stem cell agency.

Bruce Montgomery

One is Bruce Montgomery, an executive in Washington state with Gilead Sciences, Inc., of Foster City, Ca., reliable sources told the California Stem Cell Report. The other is Stephen Juelsgaard of Woodside, Ca. He is a former executive with Genentech who was appointed to the CIRM board recently. His appointment may indicate that he is not actively seeking to replace Robert Klein, who is resigning as chairman.

Scuttlebutt has it that Montgomery is favored by CIRM President Alan Trounson. Montgomery is senior vice president for respiratory therapeutics at Gilead. He was the founder and CEO of Corus Pharma of Seattle when it was purchased by Gilead in 2006. Prior to that he was an executive with Patho Genesis Corp. and worked at Genentech.

Montgomery was also once chairman of the Washington State Biotechnology and Biomedical Association. He is a physician with an active California license.

Juelsgaard's appointment to the board does not rule him out as a candidate for chair, but it would seem to make his possible nomination more awkward.

The other potential nominees whose names have surfaced are Frank Litvack, former CEO of Conor, and Jonathan Thomas, chairman of Saybrook Capital of Santa Monica, Ca.

Four statewide officials are charged with nominating candidates. The officials are the governor, treasurer, controller and lieutenant governor. Their nominations are expected on Monday if not sooner. The CIRM board can only choose among the nominees. The board is expected to take up the matter at a meeting in San Diego June 23.

Cardiologist/Entrepreneur Eyed for Stem Cell Agency Chair

Frank Litvack
Cedars Photo

A Los Angeles cardiologist who is also described as a "serial entrepreneuer" is under consideration as a possible candidate for chairman of the $3 billion California stem cell agency.

He is Frank Litvack, former CEO of of Conor Medsystems Inc. of Menlo Park, Inc., which was purchased by Johnson & Johnson for $1.4 billion in 2006. Conor developed what Business Week called a "new breed of stent."

Several sources told the California Stem Cell Report that Litvack is one of several possibilities to replace Robert Klein, who is resigning effective June 23, as chairman of CIRM.

Four statewide officials are scheduled to make nominations for the post on Monday. At one point earlier this year, it appeared that there would be an effort to have the four nominate one person. However, that attempt has fallen by the way. John M. Simpson, stem cell project director at Consumer Watchdog of Santa Monica, Ca., said,

"There will definitely be choices."

The 29-member CIRM board is expected to vote on the candidates at its meeting June 23 in San Diego. The CIRM directors Evaluation Subcommittee is expected to schedule a closed door meeting to interview candidates, who will make public presentations to the full board probably at the June meeting. At that time, the public will have an opportunity to comment.

The California Stem Cell Report disclosed yesterday that Jonathan Thomas, chairman of the Saybrook Capital of Santa Monica, Ca., is also under consideration as a candidate. Thomas is reportedly backed by Klein, although Klein has denied that via a spokesman.

Thomas is believed to support the current dual-executive structure at CIRM with overlapping responsibilities involving the chair and the president. The structure has been strongly criticized and has created public conflict in the past. Litvack reportedly favors a role that would place the chair instead in more of an oversight role.

Litvack has a slight connection already to the CIRM board. He and Sherry Lansing, chair of the CIRM Governance Committee, both serve on the Health Board of Advisors at RAND, a Santa Monica, Ca., thinktank.

In 2005 while Litvack was head of Conor, Business Week wrote about how the firm provided stock options to some doctors evaluating its technology, which was well-regarded.

The magazine said,

"Yet Conor's technology is difficult to assess, in part because some doctors helping to evaluate the devices have received stock options from the company. Among the 14 doctors who sit on Conor's scientific advisory board and are participating in clinical trials of its stent, three received consulting fees and five have received options, according to documents obtained by BusinessWeek.

"Such relationships are a growing source of concern in the medical-device industry, drawing increasing scrutiny from regulators and medical ethicists. Still, Wall Street is smitten with Conor's potential."

According to Bloomberg Business Week, Litvack is managing director of Calmedica Capital LP and a director of Nile Therapeutics Inc. and Pervasis Therapeutics Inc. From 1986 to 2000, he co-directed the Cardiovascular Intervention Center at Cedars-Sinai Medical Center. He has also founded Progressive Angioplasty Systems Inc., and co-founded itherX Pharmaceuticals, Inc.

Klein Makes It Official -- His Last Day is June 23

Robert Klein, the first and only chairman of the $3 billion California stem cell agency, has officially resigned effective June 23.

His resignation came in a May 10 letter to the statewide officials who are responsible for nominating candidates for chair of the unprecedented research effort, which is generally regarded as the single largest source of funding in the world for human embryonic stem cell research.

Klein's resignation letter is significant because he has talked about leaving his post at earlier dates several times in the past but never has. His May 10 letter makes it official.

The governor, treasurer, controller and lieutenant governor are expected to make their nominations on Monday, if not sooner. The board is expected to choose among the candidates to fill Klein's slot at its meeting in San Diego June 23.

Klein has served six-and-a-half years as chair of the 29-member CIRM board of directors. His letter mentions eight years of work. That includes the time that he and a handful of others spent writing the 10,000-word ballot initiative, Prop. 71, that created the stem cell agency. It also includes his direction of the 2004 statewide electoral campaign on behalf of Prop. 71.

Here is the text of Klein's letter.

"It has been my honor to serve as the Chairman of the Governing Board of the California Institute for Regenerative Medicine (“CIRM”) for the last six and a half years. With your support and the support of the other constitutional officers and the Legislature, we have made great strides towards achieving our goal of finding therapies and cures for Californians who suffer from chronic disease and injury. Just last week, CIRM’s Governing Board approved a loan to Geron, a California company, to support a human clinical trial involving the use of embryonic stem cells to treat individuals with spinal cord injury. We expect that CIRM’s Disease Team Research Awards, which were approved last year, will lead to additional human clinical trials within the next 24 months.

"Having spent the last eight years of my life dedicated to the cause of stem cell research, I remain deeply committed to CIRM’s mission. When I .,agreed to be considered for a second term, however, I made it clear that, in light of my personal and professional obligations, I could only serve six months. I am therefore writing to submit this letter of resignation from my position as the Chair of the Governing Board of CIRM, effective at the close of business on June 23, 2011."

"Thank you for your leadership and support of stem cell research. I strongly believe the advances of California’s stem cell scientists and clinicians will profoundly reduce the future of human suffering from chronic illness and injury."

Southern California Investor Identified as Possible Candidate for CIRM Chair

Robert Klein, chairman of the $3 billion California Institute for Regenerative Medicine, is backing the head of a Southern California investment firm to succeed him at the helm of CIRM as it pushes aggressively to bring stem cell therapies into the marketplace, according to a reliable source.

However, James Harrison, outside counsel to the CIRM board, flatly denied that Klein has endorsed any candidate.

Nominations for the position are scheduled to be announced on Monday. Klein's six-year term expired last December. Klein, a real estate investment banker and attorney, was re-elected to his post on an interim basis and said he will not serve after June.

The candidate in question is Jonathan Thomas, chairman and co-founder of Saybrook Capital LLC, of Santa Monica. The firm manages $750 million in investments, focusing on distressed and defaulted municipal bonds, a term that includes state bonds. CIRM is funded by bonds issued by the state of California, which has the lowest bond rating of any state in the nation.

Thomas has been connected with investments involving the city of Los Angeles, PG&E and the Los Angeles Community College District, according to Bloomberg Business Week. Other clients have included the Dodgers, Walt Disney, Catellus Development and Maguire Thomas. According to Bloomberg, Thomas is currently writing a medical mystery novel.

In 2005, Business Week provided this description of Thomas' firm.

"Nestled 3,000 miles from Wall Street in the beachside town of Santa Monica, Calif., Saybrook Capital is an unlikely player in the rough-and-tumble world of bankruptcies. But since it started in 1990, the 60-person boutique investment bank has carved out a key role in some of the country's largest bankruptcies, advising creditors of Pacific Gas & Electric and shareholders of Kmart and Adelphia Communications). Often it competes against much bigger firms such as Lazard and Rothschild. 'We tend to get the deals that are big, ugly, and complicated,' says Jonathan Rosenthal, who runs the firm's bankruptcy practice."

Thomas has not responded to a query yesterday from the California Stem Cell Report.

CIRM responded our query through Harrison, who said,

"Don (Gibbons, CIRM's chief communications officer)advised us that you were planning on running an item stating that Bob has endorsed Jon Thomas for chair. In fact, Bob has not endorsed a candidate for chair. He has tried to assist individuals who have expressed an interest in the position by providing them with information and background regarding the agency. Bob believes the board as a whole should make the decision on the next chair after the constitutional officers make their nominations. As an individual board member, Bob will personally evaluate each candidate who is nominated based on the needs of the agency and the candidates' presentations to the board. Any representation that Bob has endorsed a specific candidate is not accurate."

We queried Harrison again following his response, asking him about Klein's ties to Thomas and whether he(Harrison) was making a distinction between backing and endorsing.

Harrison replied,

"Bob is not backing any candidate for chair, has not had business
dealings with Thomas, and has no historical social relationship with
him.

"Bob said he would be happy to talk with your source to correct this
misimpression and to understand why the individual has reached this
conclusion."

The 29-member board of the stem cell agency is in an odd position concerning selection of a chair. Unlike most governing boards, CIRM directors are hamstrung in their choice of a director, courtesy of Prop. 71, which created CIRM and was written by Klein, Harrison and a handful of others. Under the terms of the ballot initiative, which altered the state constitution, the board can only pick a chairman from persons nominated by the governor, treasurer, controller and lieutenant governor.

Those officials are expected to make their nominations on Monday, if not sooner. Names of persons under consideration are not being publicly revealed prior to that date.

Last winter, Art Torres, co-vice chair of the board, was nominated for the top post but bowed out. It appears that he is not now actively seeking the position, although he has not responded to a question on the matter from the California Stem Cell Report.

The chair selection process last winter came up short after news reports surfaced that Klein was trying to engineer, behind closed doors, the selection of his successor. The headline on one story said, "CIRM: The Good, the Bad And the Ugly."

California Stem Cell Directors to Huddle on New Chair Candidates

A key group of directors of the California stem cell agency will meet
Tuesday behind closed doors to discuss candidates to succeed Robert Klein as chairman of the $3 billion research effort.

The Governance Subcommittee has scheduled the session although it does not have any official candidates for the post. Only four state officials – the governor, treasurer, controller and lieutenant governor – can nominate candidates for the position, which could pay up to $400,000 annually for parttime work. None have done so.

The four officials have said they will not make nominations until perhaps as late as May 23.

Over the last couple of months, however, CIRM directors have indicated that they might have names that they would like to discuss, in addition to meeting with individuals to see if they have an interest in serving.

Presumably next week's meeting will take up such matters.

Look for Candidates for Chair of Stem Cell Agency in Late May

The California stem cell agency, which did not have much choice about the matter, has decided to go along with a delay in picking a new chairman for the $3 billion organization.

Outgoing Chairman Robert Klein, who is scheduled to depart in June, said the CIRM board is "amenable" to postponing until May 23 nominations to fill his shoes. Four state officials – the governor, treasurer, controller and lieutenant governor – are charged with nominating candidates for the part-time position, which could pay as much as $400,000 annually.

The CIRM board is limited to electing a chairman from those candidates, although it does not have to accept any. If the board were truly unhappy with the nominations, presumably it could designate an acting chairman or simply let the vice chairman assume responsibility in absence of a chairman. The latter action probably would not even require a vote of the board. On the other side of the coin, the officials cannot be compelled to make a nomination.

Klein's brief letter, also signed by co-vice chairman Art Torres, to the nominating officials came in response to a March 24 letter from all four officials balking at a CIRM board request 10 days earlier for nominations by April 11. The officials said more time was needed because of the importance of the position.

Klein said,

"We appreciate your desire to find a high caliber leader to replace CIRM's current board chair and the board is amendable to your proposed schedule."

Sacramento Bee Whacks Pay Plan for New CIRM Chair

In case you missed it, The Sacramento Bee editorialized last week about the $3 billion California stem cell agency, deploring its much-criticized, dual-CEO structure and the possibility of a $400,000 salary for a new, part-time chairman.

The March 28 editorial also caught the eye of Wesley J. Smith, a bioethicist who doesn't have much truck with the state's stem cell research program. He wrote on his blog,

"It isn’t the management structure that is so wrong about the CIRM.  It is the whole cronyism/conflicts of interest/arrogant thing.  California can’t afford the CIRM’s borrow and spend mandate when our infrastructure is collapsing and our state sinking to the bottom of a red ink Marianas Trench."

The Bee's editorial pointed to the proposal (first reported on the California Stem Cell Report March 23) by outgoing CIRM Chairman Robert Klein, a real estate investment banker, Art Torres, co-vice chairman of the CIRM and former state legislator, and Ted Love, a biotech industry executive and vice chair of CIRM's Evaluation Subcommittee, to use "private" donor funds to pay a portion of the new chairman's salary. The Bee said,

"Nonsense. It’s all public money. That board does not need a part-time chair with that kind of salary. The board should nix it at the next meeting. Having a single agency with two CEO-level salaries is craziness at any time, but especially during a deep economic downturn. The Legislature should realign the roles of board chair and agency president before this goes too far. Make it crystal clear that the full-time president manages all day-to-day operations – and that the board chair is a part-time oversight role."

The good news for CIRM in the editorial is that it drew only nine comments from readers on The Bee's Web site. All were negative about CIRM, however.

(Editor's note: an earlier version of this item incorrectly said that Ted Love was chair of the Evaluation Subcommittee.)

Gov. Brown and Others Seek Delay in Filling CIRM Chair Position

California Gov. Jerry Brown and three other top state officials are balking at making nominations as early as next month for the new chair of the $3 billion California stem cell agency.

In a letter to the CIRM board, Brown, Controller John Chiang, Treasurer Bill Lockyer and Lt. Gov. Gavin Newsom said they wanted to wait until possibly May 23.

The CIRM governing board on March 14 asked that nominations be made by April 11. The board had approved a timetable that would have made it possible for the board to fill the slot by its meeting early in May.

CIRM Chairman Robert Klein was re-elected in December to a six-month term but has made it clear that he would prefer to leave earlier.

Here is the entire text of the letter from Brown and the others to the CIRM board:

"Thank you for your letter of March 14 regarding the nomination process and
proposed April 11 deadline for nominations for the next chair of the Independent Citizens
Oversight Committee. As your letter makes clear, this position requires a high-caliber
leader who possesses a unique executive skill set and commitment to CIRM’s important
mission. Given that, we, the constitutional officers responsible for nominating candidates,
find that a meaningful, successful search and recruitment for this role would be difficult to
complete by your requested deadline. Therefore, we propose that the deadline for
nominations be extended to no later than May 23rd, which would provide our respective
offices with up to 60 days, a more reasonable period in which to complete this important
responsibility."

Papering over the Pay Problem at CIRM: When is a $400,000 Salary Not $400,000?

Three top leaders of the California stem cell agency have come up with a plan that they hope will allow CIRM to avoid the wrath of the public when its new chairman is paid a salary that could be seven times the income of an entire, typical California household.

The proposal, which has not been laid out in public, was advanced in a March 17 letter sent to the four state officials who have responsibility for nominating a person this spring to replace outgoing Chairman Robert Klein, who is a real estate investment banker. He and Art Torres, co-vice chair of the agency and a former state legislator, and Ted Love, a San Francisco area biotech executive, signed the letter.

Under terms approved last month by the CIRM board, the new chair could be paid as much as $400,000, which is nearly seven times the median California household income of $61,000. The Klein proposal calls for only $150,000 of the $400,000 to come from "taxpayer" funds. The remainder would come from so-called "private" funds donated to CIRM several years ago by philanthropists. In fact, those "private" funds are now "taxpayer" funds, just as any gift becomes the property of the recipient, and the cash is in state/CIRM coffers.

The plan also would establish a dubious precedent and raise conflict of interest questions. It would place private individuals and possibly biotech companies in the position of paying for the salaries of CIRM leaders, as John M. Simpson, stem cell project director for Consumer Watchdog of Santa Monica, Ca., pointed out.

Asked for a comment, Simpson said,

"This plan sounds like an incredibly dubious course to me. If you want to influence CIRM, just donate to the ICOC(the CIRM governing board) chair's salary. Folks used to call that bribery."

In their letter, Klein, Torres and Love wrote,

"We are...cognizant of the difficult financial situation confronting the state and the need for agencies like CIRM to ensure fiscal restraint."

They also said,

"It is very important, however, for CIRM to have the right leadership and not limit our choice to individuals who have sufficient personal wealth to serve for little or no compensation. CIRM is at a critical juncture as it moves towards the funding of human clinical trials, Given the complexity of this effort and the importance of providing rigorous overesight, it is essential for CIRM's governing board to have strong leadership."

In addition to attempting to minimize negative public reaction, the pay plan would provide political cover for the state officials nominating candidates for chair. The officials are the governor, treasurer, controller and lieutenant governor.

As Torres mentioned at the March board meeting, none of those officials are likely to be enamored of the idea of recommending somebody for a lucrative state post while state funds to aid the poor and children are being slashed in the face of California's financial crisis.

High salaries for public officials are an anathema to much of the public, which has a visceral, hostile reaction to them. That is the case whether the salaries are deserved or necessary to attract the appropriate talent. The Klein plan, however, only compounds the PR problem. Attempting to make a $400,000 salary appear to be a mere $150,000 only makes CIRM appear deceptive and less than trustworthy. That is not to mention the dubious precedent it would set for the agency by relying on private handouts for essential operations.

The pay plan has yet to be acted on by the CIRM board. The letter said it would go to the directors' Governance Subcommittee at its next meeting and then to the full board if it is approved by the subcommittee. That could take place at the May meeting of the directors.

(An earlier version of this item incorrectly said that the letter was signed by Duane Roth, co-vice chair of the agency.)

CIRM Directors Move to Alter Role of Chair of $3 Billion Stem Cell Program

Directors of the California stem cell agency, in sharply divided moves, today said that its next chairman should serve in a part-time capacity in largely an oversight role.

The board's actions are aimed at giving guidance to four elected state officials who have the authority to nominate persons for the job, which carries a salary that can reach as high as $500,000 for fulltime work. The moves are the latest effort by the board to deal with top-level management issues that have troubled the agency since its inception.

In a 17-5 vote, the 29-member board approved a motion designating the position as parttime with the "best assessment" that it needed only a 50 percent to 80 percent time commitment, depending on the candidates.

On an 11-8 vote with three abstentions, the board approved a motion indicating that the new chair would fill more of an oversight role with the board delineating the responsibilities of the chair and president. The state's top fiscal officer, Controller John Chiang, warned yesterday that the current co-executive situation "severely compromises" accountability at CIRM.

The board hopes to elect a new chair perhaps as early as May but possibly in June to replace Robert Klein, whose term has expired.

Finding a replacement roiled the board last fall. Discussion was also vigorous today during the debate over the role of the chair – an issue that has troubled CIRM since its earliest days. Prop. 71, which created CIRM in 2004, established a dual executive situation that has created friction and still troubles the agency today, CIRM President Alan Trounson acknowledged during today's meeting.

Duane Roth, co-vice chair of the board and a San Diego businessman, noted the longstanding problem
He said,

"This has been flagged...as something we need to get fixed."

Director Claire Pomeroy, dean of the UC Davis School of Medicine, said that CIRM has evolved to the point that the board must ensure that the staff is respected and allowed to run the organization. She said,

"We should empower them to go and do their job without the micromanagement of our board."

She said the public understands that CIRM has not been optimally functional because of the "lack of clarity" between the roles of the chair and the president.

Art Torres, co-vice chair of the board and a fomer state legislator, also warned that the nominating state officials – governor, treasurer, controller and lieutenant governor – may well find themselves hard pressed to nominate someone for a $500,000 state job as the state faces a financial crisis.

Some board members offered suggestions that the time commitment range be altered to 20 to 80 percent or from 20 to 100 percent but those proposals did not win sufficient support.

The board also recommended additional criteria for the position that included "experience with advocacy, proven vision and leadership abilities, and prior scientific understanding and experience with governance."

The board 's timetable calls for nominations from the officials by April 11 with public presentations by candidates at the May board meeting.

Here is the text of the successful motion by Director Jeff Sheehy, a communications manager at UC San Francisco on the role of the chair.

"The Governance Subcommittee recommends that the board clearly delineate the discrete responsibilities of the chair, vice chairs and president, and that the chair and vice chairs lead a robust oversight effort, including taking advantage of the skills of the board members in conducting their oversight role, and if the chair and vice chairs possess expertise in the areas of responsibility assigned to the chair in Proposition 71, then the board may elect to take advantage of their expertise operationally in those areas as well."

Here is a link to the CIRM press release that deals with the succession issue and other matters at today's meeting.

CIRM Chair Should Back Away from Management Role, Says Top State Official

The board of the $3 billion California stem cell agency should direct its chairman to step aside from management of the organization and concentrate on oversight, it was told this morning.

In remarks prepared for delivery at the directors' meeting in Burlingame, Ruth Holton-Hodson, a representative of California's top fiscal officer, said,

"Frankly, it is difficult to uphold the appearance of accountability and objectivity when the board chair is involved in both management and oversight of CIRM's operations. Under the current model, the chair is essentially responsible for evaluating and approving much of his own work."

Holton-Hodson, deputy state controller, spoke on behalf of state Controller John Chiang. He is one of four statewide elected officials who can nominate candidates for chair of CIRM. He is also chair of the only state body charged specifically with financial oversight of the stem cell agency.

Holton-Hodson reiterated a number of points made by Chiang in his letter to the board yesterday. She said,

"It is also important to keep in mind that the chair is but one member of the ICOC Governing Board(the CIRM board of directors). Good governance must rely on the actions of the whole board, not a single member. As CIRM moves into the next phase, it is important that it be driven by a fully engaged oversight board, rather than a single individual, regardless of how talented that individual may be.

"As the Controller stated in his letter, CalPERS and CalSTRS (the state's mammoth retirement systems) both have a policy of voting in support of shareholder resolutions that separate the chair and the CEO of corporate boards because board independence is at the heart of effective governance and accountability. The public deserves no less from publicly-funded agencies and undoubtedly thought that independent oversight is what they would be getting from a body named the Independent Citizens' Oversight Committee(the formal name of the CIRM governing board)."

Later today the board is expected to discuss the selection of a person to replace Robert Klein, whose term has expired as chair.

Dual Execs at CIRM Severely Weaken Oversight, CIRM Directors Told

California's top fiscal officer today called on directors of the state's $3 billion stem cell agency to overhaul the role of its chairman, declaring that oversight of the enterprise is "severely compromised" when the chair is part of management.

In a letter to the 29 members of the CIRM board of directors, State Controller John Chiang said,

"It is difficult to uphold the appearance of accountability and objectivity when the board chair is involved in both management and oversight of CIRM's operations. In essence, under the current co-executive model, the chair is responsible for evaluating much of the work of the chair."

CIRM directors meet tomorrow in Burlingame to discuss the selection of a new chair to replace Robert Klein, who is its first and only chairman. Proposition 71, written by Klein and a handful of associates, legally gives the chair overlapping responsibilities with the president, a situation that has created friction in the past. Klein has additionally reached deep into the organization to deal with relatively minor matters.

Chiang said,

"The (directors') most important role – to provide independent oversight of the California Institute for Regenerative Medicine management – is severely compromised when that management includes the (board) chair."

Chiang, a Democrat, is one of four state elected officials who can nominate candidates for chair of CIRM. Chiang is also the head of the only governmental entity specifically charged with financial oversight of the agency. Last fall Chiang nominated Art Torres, co-vice chair of CIRM, to replace Klein, whose term has expired. Torres declined to run following a flap that arose when Klein tried to engineer the selection of his successor.

Chiang noted that principles of good corporate governance call for boards to "be objective and distinct from management."

Chiang continued,

"I understand that part of the concern in moving to an oversight function from the co-executive model is the need for the chair to have expertise in certain areas as bond finance or the process of moving research to commercialization. Corporations and public agencies throughout the nation hire that expertise rather than rely on the chair."

A representative from the controller's office is expected to appear before the CIRM board at its meeting in Burlingame tomorrow. Remote locations in Irvine and two in Los Angeles are available where the public can participate in the meeting. Specific addresses can be found on the agenda. Instructions for listening to the Internet audiocast also can be found on the agenda.

(Ron Leuty of the San Francisco Business Times has also written about Chiang's letter. Leuty's article can be found here.)