Pepperdine University Annual Report 2014

2014 ANNUAL REPORT

THE MISSION OF PEPPERDINE UNIVERSITY Pepperdine is a Christian University committed to the highest standards of academic excellence and Christian values, where students are strengthened for lives of purpose, service, and leadership.

Message from the Chair

If you comb through the pages of Pepperdine University’s history, you’ll find a long list of distinguished leaders.

Some tenures were short by design, such as that of Pepperdine’s first president, Batsell Baxter. His brief but celebrated presidency welcomed the fledging school’s first students while earning it full accreditation in its first seven months. Other tenures have spanned decades, like those of Chancellor Emeritus Charles Runnels and Dean James R. Wilburn. Whether making new friends or building new schools, for more than 40 years these two men have guided the University with deft hands and devoted hearts.

The pantheon of Pepperdine leadership is filled with dozens of pioneers like Batsell, Charlie, and Jim. Trailblazing leaders boldly grew the original college, successfully built a new Malibu campus, and propelled the University into the 21st century with a sterling academic reputation strengthened by an unwavering commitment to its Christian heritage. Whether serving for one year or 50, each of these extraordinary men and women have more than just managed—they’ve made remarkable contributions to the University’s progress that have set an unstoppable trajectory toward our future.

This year’s report is a glimpse at that future. The conclusion of a campaign often marks a time of transition in the life of a University, and the end of the Campaign for Pepperdine is

no exception. After years of steady guidance, many of our schools—indeed our University—closed long chapters of illustrious leadership this year and have begun to welcome the fresh energy and innovative ideas that new leaders are already bringing. Bolstered by generous campaign gifts and the work of their esteemed predecessors, these new heads of the academy will pen the pages of Pepperdine’s next chapter with focus, conviction, and certitude.

Of course, they won’t be authoring our future stories alone. Leadership at Pepperdine has always come in all shapes, sizes, and tenancies. It comes from students, whose inquiring minds are unafraid to challenge the status quo. It comes from faculty, whose research and scholarship are advancing their fields. It comes from staff, whose hearts for service dutifully carry out our mission.

And it comes from alumni and friends, whose steadfast support enables all that we do. Some are with us for a little while and others a lifetime, but all make a permanent impact on what Pepperdine is and will become.

From Batsell to you, I am deeply grateful for the exceptional history of leadership at Pepperdine and proud of the progress we’ve made. Thank you for joining us on this journey.

Edwin L. Biggers Chair, Board of Regents

Message from the President Challenges and opportunities almost always accompany one another. The past year at Pepperdine—the University’s 77th—was unlike any in recent memory in the context of leadership ... and change.

Amid the constancy of the Campaign for Pepperdine and a robust academic term for students and faculty in all schools, the University weathered significant change in leadership. Provost Darryl Tippens concluded his 13-year term as our chief academic officer, Dean Margaret Weber retired from her post at the Graduate School of Education and Psychology, and Dean Linda Livingstone at the Graziadio School accepted a new business school deanship in Washington D.C. For many, change is disruptive. Cardinal Newman, author of The Idea of the University, argued that “in order for a thing to remain the same, it must change often.” In our work at Pepperdine, our task is simultaneously to innovate while holding fast to certain immutable principles. We must get better at what we do, competing for the hearts and minds of men and women who seek a rigorous education for a purposeful life.

And we must face change, including the changing of the guard in leadership positions. We found ourselves bidding fond farewell this year to outstanding administrators with whom we share both scholarship and friendship. And we embraced the challenge of recruiting new individuals for key assignments that will propel Pepperdine, her schools, and her mission forward.

A national search for a new provost led us to affirm that the best leaders are often right in our midst. Indeed, the selection of Seaver College dean Rick Marrs to lead our academic community as provost made what might have been a tremendously challenging transition a smooth

and almost seamless one. His management of the undergraduate school, his embodiment of the Pepperdine mission, and his demonstrated qualities as a scholar and educator equip him well.

The Graduate School vacancy prompted us to look beyond our community, in a search that resulted in Helen Easterling Williams being selected to guide one of the University’s largest graduate schools. With two decades in higher education leadership, most recently at the School of Education at Azusa Pacific University, Dr. Williams will lead our master’s and doctoral programs in education and psychology, including innovative programs in social entrepreneurship and change.

Creating a climate in which a new era of leadership may take root and flourish will be among our most important tasks as 2015 unfolds. We have taken the essential steps in our national search for new deans at Seaver College and the Graziadio School, as capable interim administrators carry on the work to which we are passionately committed: strengthening students for lives of purpose, service, and leadership.

This annual report shares the events and highlights of 2014, including the unprecedented achievements of the Campaign for Pepperdine—more than $460 million raised in our collective quest to change the life of every student.

Change has been our challenge and our opportunity this year, manifest in dedicated leaders who sustain our heritage of excellence in Christian higher education for generations to come.

Andrew K. Benton President

A

YEAR IN REVIEW The story of Pepperdine University is told through the distinction, devotion, collaboration, action, and imagination of each character.

Powerful and inspiring, its telling and retelling shapes the culture of our institution.

As we turn the page on our most recent chapter, we look back on the memorable moments and inspiring community of characters that composed the 2013-2014 story.

The first annual WAVES OF INNOVATION (A) awarded substantial grants to six faculty, staff, and student finalists who presented to President Andrew K. Benton and the Waves of Innovation Committee their ideas to improve Pepperdine and make it a more agile and sustainable institution.

The DRESCHER GRADUATE CAMPUS (B) in Malibu, home to the School of Public Policy, as well as the full-time programs of the Graziadio School of Business and Management and the Graduate School of Education and Psychology, celebrated its 10th anniversary.

Career Services at the Graduate School of Education and Psychology presented the second annual CAREER ADVANCEMENT SYMPOSIUM, including alumni panelists who provided guidance on career advancement strategies.

THE HONORABLE SAMUEL A. ALITO, JR. (C), associate justice of the United States, spoke on “Lawyering and the Craft of Judicial Opinion Writing” at the School of Law to a crowd of more than 200 students, alumni, law professors, journalists, judges, and special guests.

The Graziadio School of Business and Management hosted the DIGITAL INNOVATION @ PEPPERDINE CONFERENCE, which highlighted the latest developments, best practices and business outcomes of digital innovation and the approaches needed to take advantage of opportunities in digital technology.

University Board member and longtime Pepperdine friend LISA SMITH WENGLER (D) endowed the University’s Center for the Arts with a magnanimous estate commitment to the Campaign for Pepperdine.

SARA BARTON (E) was named the new University chaplain, a vital role to Pepperdine’s spiritual community that provides pastoral care for students, faculty, and staff.

C B

D

E

H

F ELLEN GUSTAFSON (F), a sustainable food system activist, innovator, and social entrepreneur, presented a talk on hunger, obesity, and the food system as part of the W. David Baird Distinguished Lecture Series.

WOMEN IN HOLLYWOOD: 100 YEARS OF NEGOTIATING THE SYSTEM (G) focused on the special issues and challenges facing women individually and collectively in the entertainment industry.

G I

Three Pepperdine athletics teams won their respective West Coast Conference Championship games: BASEBALL with a 6-1 win over Loyola Marymount University; WOMEN’S GOLF (H) with its 13th consecutive league title; and WOMEN’S TENNIS defeating Saint Mary’s 4-2.

Visit pepperdine.edu/ annualreport2014 to watch a video of the year’s top highlights.

For the second time in three seasons, the PEPPERDINE SAND VOLLEYBALL TEAM (I) raised the AVCA Collegiate Sand Volleyball National Championship trophy after defeating Florida State 3-2.

Directed by Jason Chanos, the students of the Fine Arts Division’s theatre department performed A MIDSUMMER NIGHT’S DREAM (J), William Shakespeare’s classic tale of love and mischief.

J

SENIOR ADMINISTRATION

ANDREW K. BENTON

RICK R. MARRS

GARY A. HANSON

President and Chief Executive Officer

Provost and Chief Academic Officer

Executive Vice President and Chief Operating Officer

Benton has served as the seventh president of Pepperdine University since 2000 and continues to lead the institution to prominence among the nation’s top universities.

A lawyer by training, President Benton is the immediate past-chair of the Association of Independent California Colleges and Universities and is engaged as a member of both the board of directors of the National Association of Independent Colleges and Universities and the President’s Cabinet of the West Coast Conference.

Appointed provost in 2014 after serving as dean of Seaver College of Letters, Arts, and Sciences since 2008, Marrs is Pepperdine University’s chief academic officer, providing academic leadership to the University and its five schools and colleges, as well as the University libraries. The provost devotes significant time to issues of academic planning, program development, assessment, and the advancement of scholarship. A member of the Pepperdine Religion Division faculty since 1987, Marrs served as the Blanche E. Seaver Professor of Religion from 2001 to 2006 and chair of the Religion Division and associate dean of Seaver College.

Hanson presently serves as the University’s executive vice president and chief operating officer. His responsibilities in this role encompass broad operational, financial, budgeting, legal, regulatory, governmental, human resource, construction and campus physical planning, physical plant, administrative, and related duties. He joined the legal staff at Pepperdine as associate general counsel in 1982 and became general counsel in 1984.

He was appointed vice president and general counsel in 2000 overseeing the University’s legal, regulatory, insurance, risk, equal opportunity, and emergency operations, as well as serving as liaison to the governing board.

S. KEITH HINKLE

JEFF PIPPIN

Senior Vice President for Advancement and Public Affairs and Chief Development Officer

Senior Vice President for Investments and Chief Investment Officer

Hinkle serves as senior vice president for advancement and public affairs and chief development officer for Pepperdine University. He has overall responsibility for advancement at the University, including alumni affairs, annual giving, major gifts, leadership gifts, advancement services, gifts and records, corporations and foundations, planned giving, donor relations, and events. He also has responsibility for public affairs including university marketing, communications, public relations, and news.

Pippin is the senior vice president and chief investment officer for Pepperdine University. He is responsible for the management of the University’s endowment, general reserves, treasury, trust and annuities, and real estate. Pippin, who joined Pepperdine in 1981, is a member of the president’s cabinet and is a liaison to the Board of Regents’ investment committee.

He also serves as president of the University’s three affiliated management and holding entities.

ACADEMIC DEANS

MICHAEL FELTNER

MARK S. ROOSA

DAVID M. SMITH

Interim Dean, Seaver College of Letters, Arts, and Sciences

Dean of Libraries

Interim Dean, Graziadio School of Business and Management

Feltner is the interim dean of Seaver College and a professor of sports medicine. He is a Fellow of the American College of Sports Medicine and has served on the editorial board of Medicine and Science in Sports and Exercise and the Journal of Applied Biomechanics. Feltner came to Pepperdine in 1988 and has served as president of the Seaver College faculty association, chair of the Natural Science Division, and associate dean of Seaver College.

Dean of Pepperdine’s libraries since 2004, Roosa directs libraries on the Malibu campus and throughout the Los Angeles area, leading their efforts to provide seamless access to both print and digital resources essential for learning, teaching, and research.

Prior to joining Pepperdine, Roosa served as director for preservation at the Library of Congress in Washington, D.C.

Prior to being named interim dean in 2014 upon Graziadio School dean Linda Livingstone’s departure, Smith served as associate dean for eight years at the business school, most recently as senior associate dean. In this role, he had primary oversight for the faculty at the Graziadio School, and was instrumental in launching the Center for Teaching and Learning Excellence, along with the school’s online MBA program.

DEANELL REECE TACHA

JAMES R. WILBURN

HELEN E. WILLIAMS

Dean, School of Law

Dean, School of Public Policy

Dean, Graduate School of Education and Psychology

Tacha was named the Duane and Kelly Roberts Dean of the School of Law in 2011. She has been a circuit judge, U.S. Court of Appeals for the 10th Circuit, since January 1986. She served as chief judge from January 2001 through 2007. Tacha previously served in numerous academic capacities at the University of Kansas and practiced law in Washington, D.C.

Wilburn is founding dean of the School of Public Policy, launched in 1997. The author of books on American history, business management, and faith and public policy, he was appointed by Ronald Reagan to chair the CFTR Education Foundation, and also served on the U.S. Committee to Assist Russian Reform, cosponsored by the United States and the Russian Federation. Throughout four decades at Pepperdine, Wilburn’s leadership roles included provost, dean of the business school, and vice president for university affairs.

Williams has served two decades in higher education leadership and was appointed dean of the Graduate School in June 2014.

Prior to Pepperdine Williams held the deanship at the School of Education at Azusa Pacific University, where she successfully led school reaccreditation efforts and initial accreditation for the Azusa’s school psychology program, established their emerging-technology center, and developed an international visiting scholar program.

Message from the Chief Financial Officer

Higher education has become a pretty tough industry over the past few years.

The pressures that families face in making decisions on whether to send their children to college—and if so, where to send them—are increasing. Many families find themselves in seemingly impossible situations. In order to simply remain average in the workplace of the future, students and their parents alike feel they have no choice but to go to college. But merely remaining competitive and obtaining a college education can come at an enormous cost, adding a weight to be borne for years to come after graduation. So, what to do? Should children go to college to remain competitive in an increasingly competitive world?

How much should each family invest in the future of their children? Will families able to afford college education at all? Or should we be asking, what is the cost of not sending children to college? Every student and every family needs to carefully consider these questions in making their own very personal decision about investing in education.

For the year ended July 31, 2014 Sales and services

Other revenue Net assets released from restriction

Government grants Endowment support

Private gifts and grants

Room and board Student Tuition and Fees

Revenues

The investments we make today in our students will create returns not only for the University, but for the world in the years to come.

The published gross tuition rates of colleges across the country are high enough to make almost every family ponder these questions. For fiscal 2014-2015 the average published undergraduate tuition and fees for private four-year institutions was $31,231. Here at Pepperdine’s undergraduate Seaver College, that amount is $46,692— almost 50 percent higher than the national average. I can’t blame the hundreds or thousands of potential students and parents who look at that “sticker price” and conclude that there is simply no way they can possibly afford Seaver College. It is a daunting figure to contemplate. But, there is still hope.

What receives far less attention in the public domain is the net tuition and fees that are actually collected from students who attend private colleges across the country.

These figures are not as readily attainable, and are certainly

Membership development

Fundraising

Management and general

Instruction and research Auxiliary enterprises

Public service

Academic support Student services

Expenses

PEPPERDINE UNIVERSITY Consolidated Statements of Financial Position At July 31, 2013 and 2012 (in thousands)

ASSETS

Cash and cash equivalents............................................................

2014 $

34,650

2013 $

68,941

Student receivables, less allowance for doubtful accounts of $1,343 and $1,410, respectively.............

1,848

1,295

Other accounts receivable.............................................................

4,002

4,062

Prepaid expenses, inventories, and other assets..........................

6,149

5,512

Student loans, less allowance for loan losses of $1,599 and $1,707, respectively........................

22,038

22,749

Contributions receivable, net.........................................................

33,877

30,597

Investments..................................................................................

963,133

830,726

Assets held as trustee or agent....................................................

128,374

123,843

Property, facilities, and equipment, net.........................................

361,613

362,409

Total assets..............................................................................

$ 1,555,684

$ 1,450,134

$

$

LIABILITIES AND NET ASSETS

Liabilities: Accounts payable and accrued liabilities..................................

18,586

28,855

Accrued salaries and wages....................................................

4,369

3,579

Student deposits, advance payments, and deferred revenue..................................................................

11,092

9,977

Asset retirement obligations....................................................

6,199

5,912

U.S. government-funded student loans.....................................

15,695

15,340

Trust and agency obligations....................................................

69,136

70,754

Long-term obligations...............................................................

236,547

238,750

Total liabilities......................................................................

361,624

373,167

Unrestricted.............................................................................

703,267

630,777

Temporarily restricted...............................................................

137,943

118,605

Permanently restricted.............................................................

352,850

327,585

Net assets:

Total net assets...................................................................

$ 1,194,060

1,076,697

Total liabilities and net assets..............................................

$ 1,555,684

$ 1,450,134

not as widely reported by institutions of higher education themselves or by the media. In fiscal 2013-2014, the gross tuition price (excluding fees) for Seaver College was $44,650, but the average net tuition paid per full-time equivalent Seaver College student was 47 percent lower than this amount at $23,556. Five years ago in fiscal 2009, the average net tuition paid per full-time equivalent student was $20,765, or over 43 percent lower than the Seaver College published gross tuition price. We have consciously increased the student aid that we award in order to make it more affordable to attend Seaver College. By increasing the discount rate by more than four percent over the past five years, we have been able to slow the rate of growth in the net amount actually paid by students to an average annual increase of 2.55 percent, a rate more consistent with inflation in the United States over that same time.

I expect that many of you reading this letter will be surprised by that fact. Most are shocked to learn that despite all they have heard in the media, the actual amounts collected from undergraduates by Seaver College, after student aid has been awarded, are essentially unchanged $1200000 from five years ago after adjusting for inflation. That has not happened by accident. Pepperdine’s single fastest growing expense is student aid. Why? Because here, the 1000000 most significant investments we make are in our students, and we do everything we reasonably can to help make the 800000 education that our faculty provides cost of the world-class as affordable as possible. That investment will continue long into the future.

600000That commitment also makes it difficult to manage the increasing cost pressures that face the University. In the current environment where students and 400000 their families are challenged to bear the full weight of the cost increases we face as a University, support from our 200000particularly for student scholarships, are donors and friends, of paramount importance.

0

It may seem strange that a chief financial officer would dedicate such a large part of a university financial report to describing the difficult customer environment overall, and the difficulties they face in purchasing the services the university is offering. And it may seem equally strange 2000000 to explain the efforts taken by that net university to keep increases in the net price of the services it delivers to the smallest amount possible. For many other companies, that would certainly be true. But what we do at Pepperdine to 1500000 positively affect the lives of our students is important, and the impact that our student’s lives will have on the world is important. Ensuring their ability to attend Pepperdine University and thrive after graduation demands our best 1000000 effort, full attention, and our most significant investment.

The investments we make today in our students will create returns not only for the University, but for the world in the years to come. 500000

Net assets

(in thousands) $1200000

20000

1000000

15000

800000 600000

10000

400000

5000

200000 0 2009

2010

2011

2012

2013

2014

Total assets

(in thousands) 2000000

net

800000 700000 600000

1500000

500000 400000

1000000

300000 200000

500000

100000 0

0 2009

(in thousands) 800000

2010

2011

2012

2013

2014

2013

2014

Endowment assets total

700000 600000 500000 400000 300000 200000 100000

0

0 2009

2010

2011

2012

Maintaining a strong financial position enables the University to make these investments in our students’ futures. And while our total endowment funds ended fiscal 2014 at an all-time high of $790 million, the operating support they provide to the University represents only 8.7 percent of total expenses (including student aid).

Significantly increasing the level of support we receive from endowment funds is critical to the future success of the University in an increasingly competitive environment.

Additional revenues from endowment support will help continue to reduce the cost increases that our students will experience in the future. Additionally, increased endowment support will help to make more significant awards of aid to those students most closely aligned with the mission of the University. While endowment support represents a relatively small amount of total expenses, the operating support it has provided to University operations has increased every year since 2007 from $26 million to almost $34 million in fiscal 2014. This trend must continue, and it will continue with the ongoing support of our alumni and supporters contributing to University endowment funds.

For fiscal 2014, the University’s full-time-equivalent student base of 6,048 declined from the 6,202 level five years ago during fiscal 2009. Pepperdine’s peak student enrollment occurred back in fiscal 2004, and since that time, we have budgeted flat to declining total enrollments and have consistently generated operating surpluses in each year.

We don’t measure success by the increasing size of our student enrollment, but through the ways we enrich and encourage every individual student who enters our care.

Our low student-to-faculty ratio and small class sizes are a comparatively expensive way to teach, but we believe that is the best way for our faculty to engage students and help transform their lives. We’re not about “getting bigger,” but we are most certainly about “getting better.”

In addition to reaching a new record in the amount of endowment funds as I previously discussed, total assets, total investments and cash, total net assets, and unrestricted net assets all finished fiscal 2014 at record high levels. Increases in investment values and another year of positive operating results contributed to the improvement in the University’s financial position.

Total liabilities, as well as long-term obligations outstanding, declined modestly from one year ago, and the amount of expendable net assets available to repay outstanding longterm obligations also increased during the past year. As a result, at the end of 2014, the University could repay the total amount of its outstanding debt 3.2 times from these resources. The outstanding amount of the University’s debt remains at conservative levels.

I am blessed to serve Pepperdine at this point in its history.

The progress we have made in building the financial strength of the University over the past year is tremendous.

But, none of it would have been possible without the continued blessings of God, and without the bountiful help and support of those who love Pepperdine University.

Paul B. Lasiter Vice President and Chief Financial Officer

PEPPERDINE UNIVERSITY Consolidated Statement of Activities For the year ended July 31, 2014 (in thousands) Temporarily Restricted

Unrestricted

Permanently Restricted

Total

REVENUES

Student tuition and fees........................................................

$

Less student aid..................................................................

298,111

$

– $

– $

298,111

$

(96,604) $

– $

– $

(96,604)

Net student tuition and fees..............................................

201,507

–

–

201,507

Room and board....................................................................

34,425

–

–

34,425

Private gifts and grants.........................................................

11,476

5,517

13,168

30,161

Endowment support..............................................................

33,377

–

274

33,561

Government grants...............................................................

3,679

–

–

3,679

Sales and services................................................................

6,430

–

–

6,430

Other revenue.......................................................................

6,118

50

1,136

7,304

Net assets released from restriction.....................................

$

5,058

$

(5,058) $

Total revenues.............................................................

$

302,070

$

Instruction and research.......................................................

Academic support.................................................................

$

–

509 $

14,578 $

317,157

90,382

–

–

90,382

49,647

–

–

49,647

Student services...................................................................

49,145

–

–

49,145

Public service........................................................................

14,202

–

–

14,202

Auxiliary enterprises.............................................................

26,847

–

–

26,847

Management and general.....................................................

52,521

–

–

52,521

Membership development....................................................

2,304

–

–

2,304

Fundraising...........................................................................

$

7,445

$

– $

– $

7,445

Total expenses.............................................................

$

292,493

$

– $

– $

292,493

9,577

509

14,578

24,664

–

4,874

737

5,611

Dividends.........................................................................

8,831

3,345

1

12,177

Interest.............................................................................

845

11

191

1,056

Other................................................................................

6,142

–

3

6,145

EXPENSES

Change in net assets before nonoperating revenues and expenses...........................................

–

NONOPERATING REVENUES AND EXPENSES

Actuarial adjustment.............................................................

Investment income:

Investment expenses............................................................

(3,500)

(1,319)

–

(4,819)

Net realized and unrealized investment losses......................

47,783

14,534

9,380

71,697

Foreign currency translation.................................................

15

–

–

15

375 $

547

18,829 $

10,687 $

92,429

72,490

19,338

25,265

117,093

$

630,777 $$

118,605 $

327,585 $

1,076,967

$

703,267

137,943 $

352,850 $

1,194,060

Other.....................................................................................

$

2,788

$

(2,616) $

Total nonoperating revenues and expenses......................

$

62,913

$

Change in net assets.............................................................

Net assets at beginning of year...................................

Net assets at end of year.............................................

$

BOARD OF REGENTS

The 40-member Board of Regents is the legal governing body and chief policy board of the University. Life Regents are recognized and honored for their extraordinary service as past regents.

The University administration works with the Board of Regents to shape policy and direction for the University.

The leadership provided by these distinguished and committed men and women is greatly valued.

Edwin L. Biggers, Chair

Michelle Hiepler (JD ‘89)

President (Retired) Hughes Missile Group

Partner Law Offices of Hiepler & Hiepler

James R. Porter, Vice Chair

Glen A. Holden

Principal Porter Capital Partners

United States Ambassador (Retired) Managing Partner, The Holden Company

Susan F. Rice, Secretary (EdD ‘86)

Gail E. Hopkins (‘66, MA ‘74)

Senior Consulting Associate Brakeley Briscoe, Inc.

Orthopaedic Surgeon

Frederick L. Ricker, Assistant Secretary Vice President and General Manager (Retired) Northrop Grumman Aerospace Systems William H. Ahmanson President The Ahmanson Foundation Andrew K. Benton President Pepperdine University Sheila K. Bost Marriage and Family Therapist Private Practice Charles L. Branch Professor of Neurosurgery Wake Forest University Health Center Dale Brown (‘64) Principal Moriah Group, Petroleum Strategies Janice R. Brown Circuit Judge United States Court of Appeals for the D.C. Circuit Jose A. Collazo (MBA ‘77) Vice Chair and President Form I-9 Compliance, LLC

Peter James Johnson, Jr. President Leahey & Johnson, P.C. John D. Katch (‘60) District Manager (Retired) Southern California Edison Company Dennis Lewis (‘65) President and Owner WorldTravelService John T. Lewis (’83) President Eugene Lewis & Associates Kimberly J. Lindley Past Cochair National Seaver Parents Council Eff W. Martin Managing Director (Retired) Goldman Sachs & Company Faye W. McClure SME Distribution Executive United Stgates & Canada AIG Property & Casualty Michael T. Okabayashi Partner Ernst & Young Danny Phillips Investments/Ranching Timothy C. Phillips (‘87) Chief Executive Officer Phillips and Company John L. Plueger President and Chief Operating Officer Air Lease Corporation

Russell L. Ray, Jr.

LIFE REGENTS*

Airline and Aerospace Companies Executive (Retired)

William S. Banowsky (MA ‘94)

Carol Richards B. Joseph Rokus (‘76)

Joe R. Barnett Lodwrick M. Cook

Manager SPP LLC

Jerry S. Cox

P. Bui Simon (‘96)

Hari N. Harilela

President Angels Wings Foundation International

Jerry E. Hudson

Harold R. Smethills

Terry M. Giles (JD ’74)

Managing Director Sterling Ranch, LLC

Jerve M. Jones

Dee Anna Smith (’86)

Charles B. Runnels

Chief Executive Officer Sarah Cannon Research Institute

Thomas J. Trimble

Rosa Mercado Spivey

William R. Waugh

Physician Medical Director, LAUSD

J. McDonald Williams

William W. Stevens

Helen M. Young (‘39)

Board Chair (Retired) Triad Systems Corporation

*Nonvoting Regents

Stephen M. Stewart President Stewart Brothers Drilling Company Augustus Tagliaferri (MBA ‘74) Chair and President Financial Structures, Inc. Marta B. Tooma Philanthropic Dentist Robert L. Walker (MA ‘66) Senior Executive for Development Texas A&M University Hagler Center Marylyn M. Warren (‘58) Vice President eHarmony.com, Inc.

UNIVERSITY BOARD

The Pepperdine University Board comprises business, professional, and civic leaders who demonstrate their confidence in the University’s distinctive mission. Quarterly meetings provide an opportunity for members to offer counsel and guidance on important policy matters and to hear timely reports from the president, administrators, professors, and students.

Pat Boone (Chair)

Gregory R. McClintock

William H. Ahmanson, Jr.

Warren R. Merrill

Robert Barbera

E. Chadwick Mooney

Nabil Barsoum

William S. Mortensen

William W. Beazley

Kenneth Mosbey

Paul F. Bennett

Aaron Norris

Andrew K. Benton

Stephen E. Olson (MBA ’73)

A. Ronald Berryman (’62, MBA ’67)

Michael C. Palmer

Viggo Butler (MBA ’80)

John D. Ratzenberger

Rod Campbell

Kelly Roberts

Peter Chung

Twanna M. Rogers (MBA ’77)

Nancy M. De Liban

Charles B. Runnels

K. Duane Denney

Joseph J. Schirripa

Robert E. Dudley

Margaret Sheppard

Maureen Duffy-Lewis

Eric Small

Mark W. Dundee (EdD ’00)

Richard L. Stack

Gregory J. Ellena

William G. Stephens

David G. Elmore

Dorothy B. Straus

Hank Frazee

George Thomas

G. Louis Graziadio III

Robert A. Virtue

Bart M. Hackley, Jr.

Ellen Weitman

Michael A. Hammer

Jay Welker

Bruce Herschensohn

Lisa Smith Wengler

Robert W. P. Holstrom

Larry L. Westfall

Katherine Keck

Jeremy N. White

M. Lawrence Lallande (’80, JD ’83)

Gary L. Wilcox

Carl J. Lambert (’78)

Griffith J. Williams

Dina Leeds

Judy Zierick

Stephen Lehman Wes W. Lucas Seiji Masuda Takuji Masuda (’93)

STATEMENT OF AFFIRMATION PEPPER D IN E UNI VERSI TY A FFI RMS That God is That God is revealed uniquely in Christ That the educational process may not, with impunity,

be divorced from the divine process

That the student, as a person of infinite dignity,

is the heart of the educational enterprise

That the quality of student life is a valid concern

of the University

That truth, having nothing to fear from investigation,

should be pursued relentlessly in every discipline

That spiritual commitment, tolerating no excuse

for mediocrity, demands the highest standards of academic excellence

That freedom, whether spiritual, intellectual,

or economic, is indivisible

That knowledge calls, ultimately, for a life of service.

2014 ANNUAL REPORT