FIERY EXIT FROM CENTER’S BOARD IS DUE TONIGHT

Old soldiers may fade away, but not John M. Rau. A former Navy man who favors military allusions, he plans to make waves at the end of his nine years on the Orange County Performing Arts Center’s board of directors, including two crucial years as chairman.

Rau’s last hurrah will come at 7:30 tonight at the annual meeting of the Center’s contributors--an event held at the Center and usually as lively as afternoon tea at the Ritz-Carlton.

But the outspoken Rau, who hasn’t been renominated to the board, plans to set off a few sparks with his parting observations.

In an interview, Rau, 61, concentrated much of his criticism in three areas:

--The board’s emphasis on selecting members based on their ability to make financial contributions and, in turn, attract them from others.

--The board’s closed-meetings policy. Only tonight’s annual meeting is open to the public.

--Its delay in building a second theater at the Center.

Rau also said he is concerned about the operation of the Center and its projected annual deficit of $4.5 million.

“A good board needs three types: Givers, getters and governors,” he said in a wide-ranging interview in his sprawling home on a hilltop in Orange. “Right now we’re pretty much focused on givers, not even getters. I think we have abandoned the role of governors.”

Rau, a stocky, balding man who mixes his criticisms with unabashed enthusiasm for the Center’s goals, believes that he has been dropped from the board because of his outspoken style. “Here, former presidents don’t fade away, they just lose their clout and get shot,” he said.

Hugh M. Saddington, chairman of the board’s nominating committee, denied that Rau’s bluntly critical style was behind the committee’s decision to conclude his board membership. Rather, said Saddington, his leaving is part of the board’s “evolution” away from the generation of board members who built the Center. He said four others are stepping down after several three-year terms, although there is no official length-of-service limit.

In fact, Saddington was one of several board leaders who praised Rau, a Chicago-born engineer who runs a Costa Mesa company that makes high-technology equipment for the oil industry.

“The Center under his presidency went from a totally volunteer organization to a professional organization. He hired Len Bedsow (the first executive director) and was very involved with the details of building the Center. . . . He has a little bulldog in him and was always asking questions: ‘How are we going to run this Center? How are we going to fund it?’ He never gets carried away by the euphoria of the moment.”

The salty Rau, who joked that “my blood type is AO--for aggressive-obnoxious,” hasn’t shied from controversy.

Here, then, are a few thoughts from Rau, a past president of the Center’s nonprofit corporation and board chairman from 1982-84:

On the composition of the current 33-member volunteer board:

“All we hear now is ‘raise money, raise money, raise money’ . . . and the danger of that (as the dominant standard for selecting members) is that it does just limit the nature of it (the board) to a higher economic strata. And the people who want to become involved with the Center, who have a passion for it but can’t necessarily give a ton of money, will find they can’t rise to the top and become discouraged.”

On executive committee member Henry T. Segerstrom, the most visible member of the family that gave the land and $6 million for the Center: “The dominant influence on the volunteer side is Henry Segerstrom. He is essentially unchallenged by the board. Henry Segerstrom’s techniques are to work behind the scenes, not with the open board . . . and what comes to the board is predigested (from the executive committee that has included six to eight of the Center’s top officers). Henry never fronts an issue at a board meeting. Others present the issue.” Segerstrom did not respond to requests for an interview for this story.

On the relationship of the board to the Center’s professional staff:

“As you move into the steady operating phase of an organization, you inevitably become more staff-dominated,” he said. “But the professionals should be smart enough to involve the amateurs to a degree so that they . . . make good policy decisions, so they do represent the (donors). . . .”

On the 1,000-seat theater planned for a site adjacent to the main hall:

“Every indicator is that we will build it, but (the timing) needs to be pushed up. I will go to the mat for that. I know that some of the Segerstroms see it as important, but if it comes out that there really is no intention to build it, there would be a real battle with other people in this community.”

Rau said the board should have given more thought last year to shifting $4 million in surplus donations collected for Segerstrom Hall into construction of the second theater. Instead, the board channeled the money into a repair fund. Other Center officials say they had to take that action because donors earmarked the gifts for the large theater.

Throughout the interview, Rau repeatedly raised the need for the board to examine Center policy in “enlightened detail” and in public meetings.

“My point of view is that the board of directors of this corporation is just like the board of directors of any corporation,” he said. “We are responsible to the shareholders for the proper conduct of the business . . . the shareholders are all of our contributors. . . . Because we are tax exempt . . . I think the public should be able to attend (board meetings) except when we discuss personnel and staff. The people who run this center are not elected officials, but they are private individuals with a public trust.

“Basically I feel that philosophical issues are not coming before the board. What are the sources of the deficit? Are we keeping the center open too many nights, not enough nights?

Now, (topics to be voted on) come to the board and we get a piece of paper that says what the executive committee has decided or recommends. It’s gotten to the point where the only dissent is Rau . . . it’s an oligarchy instead of a democracy.”

Board members’ reactions to Rau’s views were varied.

“I think your givers are also your best getters, and the people who are there now are also your best governors,” said board Chairman William S. Lund, whose two-year term ends today. “I think the board today is probably stronger than it has ever been.”

President and Chief Executive Officer Timothy L. Strader, whose terms also ends today, could not be reached for comment.

Saddington said Rau correctly assessed that fund-raising to meet the Center’s projected annual deficit is becoming the board’s main function.

“The main purpose of the board is raising money for the operating fund,” Saddington said. “We are searching for people with a responsibility to raise money. It is a different kind of personality than what we’ve been looking for (at a time when the board relied less on a professional staff).”

Lund rejected Rau’s suggestion that board meetings be opened, saying that then “you probably would not have a board of directors. . . . I wouldn’t serve. I’ve been around long enough to know that once you start doing that you will never get business issues at hand taken care of.”

But at least two other board members agreed with Rau’s portrayal of the group.

“There are not many people on the board who are aggressive and tell the board what they think,” said board member Frederick Rohe. “I avoid controversial things. The Segerstroms are good social friends, and I would never do anything to attack the integrity of the family.”

Said another board member, asking not to be named: “Too many decisions are being made by the executive committee and not enough by the board as a whole. John is right.”

Rau said he wasn’t speaking from a sour grapes perspective. “I want to go out like Eisenhower addressing the nation on the dangers of the military-industrial complex.”

Even those who frown at Rau’s bluntness praise his hard-nosed business sense. He graduated in 1950 from the Massachusetts Institute of Technology. Records there confirm that he received three simultaneous degrees in aspects of business and engineering. In World War II, he was a noncommissioned officer fighting with the Navy’s amphibious forces in the Pacific.

Fighting for lonely, carefully thought-out stands has been the Rau trademark at the Center.

He was in a minority of one in the late 1970s when he hammered away at his proposal that building the facility would be pointless without providing money to run it. He brainstormed what has become a potential endowment of $65.7 million. It is his main legacy.

But he describes its acceptance as a battle he only half won.

“My proposal initially was that whenever we collected any donation for the Center, 30% would go to the endowment. If it was cash, the cash would be divided. If it was a pledge, the pledge would be divided.”

Gary Phillips, a fund-raising consultant, said in an interview that he argued against Rau’s concept for the endowment because channeling cash into that fund would have drained momentum from the construction campaign. In the end, the board approved Phillips’ fund-raising plan for an endowment consisting of deferred pledges for money the Center would get only when donors died. The fund now contains $65.7 million, about $1.4 million in cash.

One of the most important questions the board faces, Rau said, is what to do about the second theater. Rau said the second theater has been part of the Center plan since the late 1970s.

At one time, the theater was to open 12 to 18 months after the main hall. But that hope began eroding around 1983, Rau said, as pressure increased to streamline the fund-raising for the main theater. Lund and others have said the theater will eventually be built, but Rau doesn’t think the Center should wait long before starting to raise funds.

“There are a lot of things that can’t be done in a big house. You aren’t going to have smaller experimental performances of modern dance. You’re not going to bring in a one-man show or do a reading.

“If I get a chance to speak Monday, the second theater is definitely one of the things that I want to mention. I don’t want it to be forgotten. That is part of the natural process of new directors coming and old directors going--you lose the sense of corporate memory. It is important to have people who can look back and help you learn from what has gone before.”