W hile a fair amount of attention has been paid to how much the college presidency has changed over the years, much less attention has been paid to how much presidential contracts have changed as well. Of course, not all of those changes have been good for colleges.
Five years ago we studied the contracts of 116 public-university presidents, including the benefits promised to outgoing leaders. We found that most contracts guaranteed, among other things, that a president would be given a tenured position on the faculty. Since then, we’ve reviewed dozens more contracts and have noticed a concerning trend emerging in these more recent agreements.
Specifically, we have observed greater sophistication — greater detail with more nuanced phrasing — and more lucrative benefits in termination clauses, especially in the protections and benefits provided to the presidents. In some ways that’s not surprising, given that many new presidents employ lawyers who specialize in brokering such contracts. However, in agreeing to these terms, governing boards are creating significant future financial liabilities for their institutions.
The nature of the modern presidency helps explain why. According to data from the American Council on Education, most presidents (75 percent) have not previously been presidents, with only 19 percent reporting that they entered their current position directly from another presidency. So if their benefits include, as most do, returning to a tenured faculty position at their full presidential salary after a sabbatical, these liabilities can be expensive. If there is more than one former president on the faculty, the salaries due them can add up quickly.
When presidents are forced out early because their relationship with the board isn’t working, that’s a hard pill to swallow for institutions. Colleges can be on the hook for millions of dollars over the years for a presidential hire that didn’t pan out.
Now, however, we see a new group of failed presidents — those who resign amid allegations of various types of misdeeds but are still able to return to campus as senior-level, tenured faculty members. In these cases, we are not seeing governing boards terminating the president “for cause” — often defined within contracts as arrest or indictment, fiscal misconduct, or conduct that falls below minimum standards of professional integrity. Instead, governing boards are allowing them to resign before the end of their term or are terminating them “without cause.” Whether they resign (as in a recent case in California) or are terminated without cause, the president usually has the right to become a tenured faculty member.
It is time for trustees to exercise their responsibility as custodians of public institutions and to rethink the termination clauses in presidential contracts.
Even in some of the most egregious cases of wrongdoing, tenure has been viewed as a “severable” right from an appointment as president; tenure is a separate and different aspect of the appointment. We saw that this year at Florida International University, when Mark B. Rosenberg returned to the faculty after resigning due to a harassment scandal. We also saw it at the University of Michigan, when Mark Schlissel returned to the faculty after the institution fired him for having an inappropriate relationship with a subordinate. In both cases, it was clear that firing a president for cause would not automatically break tenure.
Even under the best circumstances, granting tenure to presidents is a questionable decision. Based on our research, presidents have little time to contribute to scholarly research in their field and rarely teach while in office. They are likely unprepared to meet the needs of today’s students in the classroom. Faculty and staff, however, probably appreciate a successful former president’s work, and students may look forward to taking a class from him or her. But is burdening an institution financially by granting tenure to presidents who disgrace themselves, and possibly their institutions in the process, appropriate?
It is time for trustees to exercise their responsibility as custodians of public institutions and to rethink the termination clauses in presidential contracts. We suggest that presidents should have to forfeit their tenure rights automatically when:
- They are terminated for cause. Full stop. It’s over. The contract for Santa Ono, the University of Michigan’s new president, includes wording to this effect, but this is the first time we’ve seen such language.
- They are terminated without cause during their first term. They should receive a prenegotiated and prorated severance payment — not a newly negotiated exit agreement that buys out their tenure rights.
- They resign without good reason before the end of the first term. (As opposed to a good reason, which might include if the board violates the terms of the contract.) Other than for disability, they should not be entitled to any additional compensation beyond the effective date of their resignation.
That may sound harsh, but let’s consider the long-term finances with a theoretical example. A 63-year-old president (the average presidential age, according to ACE) is making $715,000 (the average we calculated in our last study). She is terminated with cause but maintains her tenure rights. She is given a one-year sabbatical to prepare for returning to the classroom with her full presidential salary, both of which are typical in contracts.
If we assume that she remains on the faculty for 10 years, then a rough but reasonable estimate for the cost of her total compensation, including fringe benefits, with an average raise of three percent per year is just shy of $9 million.
For those 10 years, using the same calculations, a full professor’s total compensation might be just over $2 million. And, it should be noted, these professors likely will have greater responsibilities than the newly retired president.
According to the most recent data from College Board, the average tuition and fees for an in-state student at a public flagship university this year is $12,486. So for the cost of this jewel-encrusted platinum parachute for a failed president, the average public flagship university could provide 72 full in-state scholarships each year.
Should a governing board spend $9 million from funds paid by the public, students, and donors on a former president? Or would investing in future generations make more sense than enriching someone whose career ends in controversy?
In answering these questions, governing boards should remember both their fiduciary and moral responsibilities before allowing a disgraced former president to pass Go and collect $10 million.
