big bucks running colleges

Doug Henwood dhenwood at panix.com
Tue Nov 21 11:05:44 PST 2000


[According to the Chronicle's database, Yale had revenues of $1.6 billion in 1998-99, and expenses of $1.2 billion; Harvard, $2.9b and $1.8b. Of course, these are "nonprofit" institutions.]

Chronicle of Higher Education - November 24, 2000

74 Private-College Presidents Earned More Than $300,000 in 1998-99

Salaries and benefits continue to rise; Williams tops survey with $878,222 for departing chief

By JULIE L. NICKLIN

The 1990's closed on a lucrative note for the presidents of many private colleges.

The most handsomely rewarded was Harry C. Payne, who in 1998-99, the last year he was president of Williams College, was paid $878,222 in salary and benefits.

All told, 74 presidents were paid at least $300,000 in 1998-99, by far the largest number since The Chronicle began tracking executive compensation, in 1991-92. The number of top earners increased by 21 percent from the previous year, when 61 presidents were paid at least $300,000, and nearly doubled in just three years, from 1995-96, when 38 presidents were paid that well.

In 1998-99, 21 chief executives earned $400,000 to $499,999, up from 13 the year before, and 46 took home $300,000 to $399,999, compared with 40 in 1997-98.

As for Mr. Payne's compensation in the 1999 fiscal year, the bulk -- $645,672 -- was for benefits, a payment that he and Williams officials decline to explain except to call it "an accrual" to be paid over time to Mr. Payne, who resigned that year. The president had received $49,105 in benefits the previous year.

However, several Williams professors, asking not to be named, say the nearly $600,000 increase can be more accurately described as a "buyout" or a "payoff." They argue that Mr. Payne was essentially fired. College officials won't comment on the departure of Mr. Payne, who is now president of Woodward Academy, a private school in Atlanta. He also declined to comment.

Whatever the terms of his departure from Williams, they assured Mr. Payne a spot among the seven private-college presidents who earned more than $500,000 in total compensation -- salary plus benefits -- during the 1999 fiscal year, according to an annual survey by The Chronicle.

Mr. Payne was the only president to make the half-million-dollar club in 1998-99 because of a special departure package. The other six did it based on regular pay and benefits.

They were: Judith Rodin, of the University of Pennsylvania; L. Jay Oliva, of New York University; William R. Brody, of the Johns Hopkins University; Joe B. Wyatt, then of Vanderbilt University; Richard C. Levin, of Yale University; and George C. Rupp, of Columbia University.

Presidents at research universities continued to reap the highest salaries, but there was growth at all levels.

The median compensation for presidents at Research I and II universities in 1998-99 was $393,288, up 3 percent from the previous year. The median for Doctoral I and II institutions was $218,703, up 9 percent; the median for Master's (comprehensive) institutions I and II was $160,396, up 3 percent; and the median for Baccalaureate I institutions was $194,640, up 9 percent.

The Chronicle categorized the 479 institutions in its survey under the classifications of the Carnegie Foundation for the Advancement of Teaching in effect when the colleges reported the information. That classification was changed this year.

The survey is based on a federal tax return, called the Form 990, that requires nonprofit institutions to disclose, among other financial information, how they compensate their top officials and their five highest-paid employees. The forms do not include how much money those people might have received from working as outside consultants or serving on outside boards.

The rate at which presidential salaries is climbing alarms some observers, who question whether colleges are thinking -- and acting -- more like big corporations than academic institutions.

"The problem is not what any one president gets, but the cumulative effect -- the total picture it paints," says Patrick M. Callan, president of the National Center for Public Policy and Higher Education. "This has been a decade in which people at the top end have done extremely well, and education has tried to do the same thing."

But trustees, college officials, and headhunters argue that to get a quality leader, you have to pay top dollar. The job, they say, requires skill in many areas, including fund raising, financial management, and academic affairs, and demands long hours. The presidents are being paid what is fair and necessary, they contend.

Presidential candidates, they point out, are negotiating harder for higher compensation these days, even bringing in lawyers to do the bargaining for them. "For some of these presidents, they could easily be a C.E.O. of a major company, but they love education, and they pay a big price for that," says Jean Dowdall, a vice president of A.T. Kearney Executive Search, which helps colleges recruit senior officials.

The price that Penn's Ms. Rodin pays, however, hasn't been quite as great as that of others, considering that she held the No. 2 spot in 1998-99. Her compensation of $655,557 ($603,165 in salary and $52,392 in benefits) was nearly 20 percent higher than in 1997-98.

James S. Riepe, chairman of Penn's Board of Trustees, says the $107,183 increase in her pay was largely due to a "meaningful incentive plan." If Ms. Rodin achieves certain goals in a given year, or in a series of years, her compensation will reflect it, he says.

Each year, he explains, Ms. Rodin is evaluated on how well Penn stacks up to the competition in such areas as enrollment and programs, and how well the president has met Penn's short- and long-term goals.

"There is a significant piece of her compensation at risk, and it will be an incentive for her to perform in a certain way," Mr. Riepe says, acknowledging that the practice isn't common in academe.

"Retention is a factor in it. And we feel she deserves to be among the highest-paid presidents of the institutions," he says. "If this were a corporation, she'd be paid in multiples."

Ms. Rodin wasn't the only president to get a raise of about $100,000. So did N.Y.U.'s Mr. Oliva, who held the No. 3 spot, having collected a total of $649,633 ($626,000 in salary and $23,633 in benefits) in 1998-99.

"We thought he was behind," says Martin Lipton, chairman of N.Y.U.'s Board of Trustees. "He wasn't being paid sufficiently."

Mr. Lipton says that Mr. Oliva's raises are not calibrated to particular achievements. Instead, they reflect the board's satisfaction with his performance at the university, where he started as a professor of Russian history in 1960 and became president in 1991. The board also takes into account the cost of living in New York City. "The president of N.Y.U. has to maintain a certain lifestyle," Mr. Lipton says. "He has to pay a lot more for things."

Like many presidents, he doesn't have to pay for housing, though. The university provides him with an apartment in a university-owned building within what's considered the boundary of campus.

The No. 4 position went to Johns Hopkins's president, Dr. Brody, who earned a total of $645,710. While Dr. Brody's salary stayed relatively constant from 1997-98 to 1998-99, his benefits jumped to $200,282, from $87,218.

The increase, university officials say, was largely due to a rise in deferred compensation, from $21,000 to $120,000. The rise was approved by the board in 1998-99, but the president won't be fully vested in the amount until 2005.

The No. 5 spot was held by Vanderbilt's chancellor at the time, Mr. Wyatt, who earned $532,461 ($462,000 in salary and $70,461 in benefits); No. 6 was Yale's Mr. Levin, with $525,687 ($391,250 in salary and $134,437 in benefits); No. 7 was Columbia's Mr. Rupp, with $500,204 ($472,750 in salary and $27,454 in benefits); No. 8 was Rice University's Malcolm Gillis, with $497,691 ($399,719 in salary and $97,972 in benefits); No. 9 was George Washington University's Stephen J. Trachtenburg, with $473,233 ($421,035 in salary and $52,198 in benefits); and No. 10 was Princeton University's Harold T. Shapiro, with $456,170 ($413,000 in salary and $43,170 in benefits).

A list of the top 10 salaries alone would include most of those same names, though not necessarily in the same order. However, Yale's Mr. Levin and the former Williams president, Mr. Payne, would drop off. Replacing them would be Hofstra University's leader, James M. Shuart, who earned $407,527 in salary (and $34,693 in benefits), and Georgetown University's president, the Rev. Leo J. O'Donovan, who donated his $400,000 salary to the Society of Jesus, his religious order. (His benefits were listed as $0).

Twenty-eight institutions reported paying their presidents nothing, most of them noting that the money was donated to a religious order. Another chief executive, Daniel Ritchie, chancellor of the University of Denver, also works for nothing, but not because of a religious affiliation. Rather, his previous career as a businessman left him financially set, so he volunteers his service to the university.

In terms of overall compensation, three former chief executives received paychecks that would have placed them among the highest-paid sitting presidents.

James O. Freedman, who retired and became president emeritus of Dartmouth College in 1998-99, received $920,909, of which $474,528 was what Dartmouth calls "severance" benefits.

John R. Silber, who retired as Boston University's president in 1996 to become its chancellor, drew $814,956 in salary and benefits. University officials point out that Mr. Silber's pay in 1998-99 included a $250,000 loan that was forgiven.

And Oscar E. Remick, who retired in 1997-98 from the presidency of Westminster College, in Pennsylvania, to become chancellor and then president emeritus, in 1998-99 received $743,876, of which most was deferred compensation.

As much as some presidents were paid, most of their compensation packages didn't come close to the amounts received by some other college employees.

In 1998-99, the highest-paid employee on any campus was John P. Wynne Jr., who resigned that year for health reasons as the chief financial officer of Penn's Health System. His total compensation, $2.8-million, included an undisclosed sum of disability payments to be made over eight years, Penn officials say.

Since The Chronicle began its survey, in 1991-92, O. Wayne Isom, the chairman of cardiothoracic surgery at Cornell University, had topped the list. In 1998-99, however, he dropped to sixth place, with compensation of $1.55-million.

The highest-paid medical professor -- and second-highest-paid employee -- was James A. Grifo, a professor of obstetrics and gynecology at N.Y.U., who received $2.2-million. The No. 3 spot belonged to Eric Allen Rose, the chairman of surgery at Columbia, who earned $1.9-million. No. 4 was Zev Rosenwaks, a professor of reproductive medicine at Cornell, who took home $1.88-million. Nicole Noyes, an assistant professor of obstetrics and gynecology at N.Y.U., ranked fifth, with $1.6-million.

In all, 15 medical professors made more than $1-million in fiscal 1999. Payment for medical professors often includes earnings for treating patients at university clinics.

The highest-paid coach was Michael Jarvis, head coach of the men's basketball team at Saint John's University, in New York, having pulled in $860,093. Among other coaches, the next-largest sum went to Dennis W. Franchione, coach of Texas Christian University's football team, who received $697,275. Next in line was John R. Thompson, who stepped down in 1999 as head coach of Georgetown's men's basketball team, with $634,569.

In fourth place was Villanova University's Stephen Lappas, head coach of the men's basketball team. According to the tax form, his $493,082 in compensation included $327,745 from speaking engagements and radio and television appearances. No other institution paying coaches top dollar provided such details.

For its survey, The Chronicle sought 990 tax forms from 484 institutions. Five -- Marygrove College and Brigham Young, Harding, Pepperdine, and Saint John's (Minn.) Universities -- did not file the form because they have a religious exemption. Concordia College-Moorhead, in Minnesota, also claimed an exemption, but provided the information to The Chronicle.

About 300 institutions sent their documents after just one inquiry. The remainder required more prodding, including D'Youville College, which over the years has become the most difficult institution from which to obtain a Form 990. Administrators at the New York college insist that the figures should remain private, and that publishing them creates dissension.

The Internal Revenue Service requires colleges to make the forms available to the public. Failure to do so can result in a fine of $20 a day for the length of the violation.

In D'Youville's case, it took 4 letters, 21 telephone calls, and finally a threat of reporting the institution to the I.R.S. before officials released the tax form.

Steven T. Miller, director of exempt organizations at the I.R.S., says that the forms are designed to "give the outside world a look" into the organizations.

The I.R.S. routinely reviews the documents to see if any employees are receiving excessive pay.

Right now, Mr. Miller says, the agency is investigating compensation levels at a number of nonprofit organizations, possibly including colleges. If a person's pay is found to be excessive, a penalty would be levied on the person, not the institution.

Mr. Miller notes, however, that there is no clear way to determine what is excessive.

In a review, he explains, the service looks at how a governing board decided on an individual's compensation, and how well it "did its homework."

"The service," he says, "is not the arbiter of what fair payment is. The market is."



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