The three highest-paid public-college leaders in the
nation have something in common: They earned hundreds of thousands of dollars on their way out the door.
The size of the parting packages given to these men—two who resigned amid long-churning controversies and one
who quit unexpectedly—demonstrates just how expensive it can be for a college to end the presidency of a well-paid chief.
E. Gordon Gee, the popular and gaffe-prone former president of Ohio State University, earned more than $6-million in 2012-13, making him the nation’s top-paid college leader for that period, a Chronicle analysis has found. Mr. Gee has maintained that he resigned of his own accord last summer, but the decision came as trustees expressed impatience and disappointment with his often-ill-considered jokes.
Mr. Gee’s 2012-13 pay dwarfs the $478,896 median compensation for public-college presidents. The Chronicle’s analysis includes 256 college leaders from 227 institutions.
There is some history of presidents leaving under a cloud with millions to show for it. The top-paid public-college president in The Chronicle’s previous analysis was Graham B. Spanier, who was fired in the wake of the Jerry Sandusky sex-abuse scandal.
Rounding out the top three earners for 2012-13 are R. Bowen Loftin, a former president of Texas A&M University at College Station; and Hamid A. Shirvani, a former chancellor of the North Dakota University system.
Mr. Loftin, who was president of Texas A&M for just under four years, surprised many on his campus last July, when he announced that he was joining the faculty so that he could spend more time with students. Within five months he had taken another position, as chancellor of the University of Missouri at Columbia.
In the days leading up to his announcement, Mr. Loftin negotiated behind the scenes for money and perks. In a memo titled “deal points,” which was obtained by Texas news media, the president called for a payment equal to twice his annual total compensation and the formation of an institute for him to direct. He got much, but not all, of what he asked for, earning $1.6-million in his final year.
Mr. Loftin said in a recent interview that he employed standard negotiation tactics, pressing for items he knew he would not get in hopes of reaching an equitable arrangement.
“It was reasonably fair,” he said of the deal. “But I didn’t think there was anything wrong with it at all.”
The timing of his departure has roused suspicion that he was forced out, and Mr. Loftin declined to elaborate beyond his previous public statements that emphasized his love of teaching. When pressed about whether he had failed in the eyes of system leaders, Mr. Loftin said, “Nothing I heard from my immediate supervisor, the chancellor of the A&M system, or from the Board of Regents of the system, ever implied to me that I was not performing appropriately.”
Like Mr. Loftin, Mr. Shirvani appears to have been an able negotiator. Last spring the chancellor was under tremendous pressure to resign amid a barrage of complaints about his treatment of staff and questions about his adherence to open-meetings laws. Mr. Shirvani said he had agreed to step down on the condition that the board buy out the remaining two years of his contract, which it did.
Under the deal, Mr. Shirvani earned $1.3-million.
Along with Mr. Gee, who is now president of West Virginia University, both Mr. Shirvani and Mr. Loftin signed agreements that forbade them to bring any future legal claims against the universities they once led. The boards likewise agreed not to sue their departing presidents.
At Ohio State, the board provided Mr. Gee with a $1.5-million “release payment” in exchange for his pledge not to sue the university.
When an institution is paying millions to a sitting president, a messy divorce brings the risk of a high-cost lawsuit.
When an institution is paying millions of dollars to a sitting president, a messy divorce brings with it the risk of a high-cost lawsuit. So, in the view of many trustees, paying now makes more sense than being sued later, according to Marcus S. Owens, a former director of the IRS’s exempt-organizations division.
“If the institution loses or if they have to settle, which is more likely, the dollar amounts can be much bigger than if it’s a low-level, part-time lecturer who’s suing,” said Mr. Owens, a partner with Caplin & Drysdale, a Washington law firm.
Another big driver of pay for college presidents comes in the form of deferred compensation, which is money set aside over a period of years to be paid out at a later date. College boards often use deferred pay to retain presidents, who may forfeit it if they step down before a designated vesting date.
At Ohio State, nearly 40 percent of Mr. Gee’s total earnings for 2012-13 came in the form of a deferred-compensation payout. As with other presidents who received payouts, his total pay included money that was counted in previous Chronicle compensation surveys. (The Chronicle’s analysis is modeled on the IRS’s Form 990, a tax document filed annually by nonprofit colleges. It counts both money set aside for an executive and actual disbursements of pay in calculating total compensation.)
Mr. Gee is a perennial front-runner in presidential pay. Asked in an email about his status at the top, he replied: “Someone has to be 1. Why not me?”
Mr. Gee’s contract at West Virginia is still being completed, but he is expected to earn a base salary of $775,000.
A typical college presidency lasts for eight to 10 years, but a board’s commitment to an ex-leader hardly ends there. To attract and retain top talent, college trustees say, they are pressured to approve retirement packages that provide departing presidents with the sort of financial security to which they have grown accustomed.
Generous retirement plans persist even though college presidents could theoretically squirrel away a fair amount of money while in office, a time when most of their basic needs are met. Standard contracts include a residence with cleaning services, a car and driver, club dues, health care, and expense accounts to cover business-related meals.
Michael A. McRobbie, president of the Indiana University system and the flagship campus at Bloomington, earned $1.1-million in 2012-13, making him the nation’s seventh-highest-paid leader of a public college. And Indiana’s board has taken care to ensure that the president remains comfortable well past his final day in office.
If Mr. McRobbie, 63, works at the university through 2022, when he is expected to retire, he will be contractually entitled to two-thirds of his final presidential salary every year for the rest of his life. Today that would amount to $370,497 each year, or $7,100 per week. Those totals would include money from Social Security and the university’s standard retirement plan.
No other employee at the university has a similarly structured retirement package, which offers a defined future benefit in perpetuity. For a professor or administrator hired today, the university invests 10 percent of the employee’s base salary each year, with a future payout that is contingent on uncertain investment returns.
Mr. McRobbie has the option of extending his pension benefit to his wife, 59, who would receive payments for life if he died before her. In that case, the payments would be reduced through an actuarial analysis designed to measure the life expectancies of both parties.
Indiana’s board approved Mr. McRobbie’s retirement package in 2010 at the request of Thomas E. Reilly Jr., who was then chairman of the finance, audit, and strategic-planning committee. Mr. Reilly, now chairman of the board, said he had feared that another institution might try to lure the president away.
He commissioned an analysis of presidential pay across the Big 10 athletic conference and the Association of American Universities, a prestigious group of research institutions of which Indiana is a member. What he found troubled him.
“By my counting, over half of those institutions were going to be looking for a president over the next four or five years,” said Mr. Reilly, a retired chief executive of a chemical-manufacturing company. “I came to the conclusion that he would be a suitable candidate for every one of those institutions.”
Mr. Reilly frequently describes Indiana’s president, who is an expert in the booming field of information technology, as a “LeBron James” of higher education. Holding on to that kind of star power, the chairman argued, costs money.
“The people who gripe are the people who see some guy getting something for nothing, and I don’t think you have that here,” Mr. Reilly said.
It is unclear how much Mr. McRobbie’s retirement package will eventually cost the university. Since the president will receive only partial payments unless he stays on through 2022, Indiana officials said they were not obligated to disclose how much had been set aside thus far.
In addition to his retirement package, Mr. McRobbie’s contract provides for a $1-million life-insurance policy to be paid out to his beneficiaries after his death. Raymond D. Cotton, a Washington lawyer who represented Indiana’s board during contract negotiations with Mr. McRobbie, described insurance policies of this kind as “very, very routine.”
“I see million-dollar life-insurance policies even for small liberal-arts colleges,” Mr. Cotton said.
The million-dollar college presidency, which was unheard of at public institutions less than a decade ago, is increasingly common at top-tier universities. Nine college leaders earned more than $1-million in 2012-13, up from four in 2011-12, and three in 2010-11.
The growth in presidential pay is not confined to the top. The median $478,896 pay for 2012-13 constitutes an increase of 5 percent from the previous year. (The Chronicle’s analysis included more institutions this year. To allow for year-to-year comparisons, the median was derived from colleges in both surveys with presidents who had served for a full year.)
College trustees say they have to pay well because so few people have the skill set to run a complex academic institution. But money may not be the only factor a college president considers when looking for a job.
Ann Weaver Hart, president of the University of Arizona, earned $560,500 in 2012-13, 23 percent less than she had earned the year before as president of Temple University.
Ms. Hart said the Arizona position appealed to her because it allowed her to be closer to her mother, who lives in Utah. Even though Ms. Hart took a pay cut, she is not complaining about making more than a half a million dollars a year.
“Nobody is starving at my house,” she said.
With membership in the Association of American Universities, Arizona is an institution of greater national prominence than Temple, which is in Philadelphia. But geography and tradition, too, sometimes play a role in compensation. Public universities in Pennsylvania tend to pay presidents more than colleges in some other states do, Ms. Hart said, perhaps because the high pay at Penn State and the University of Pennsylvania influences compensation across the area. In Arizona, Ms. Hart said, there is less cultural acceptance of paying presidents in the high six figures and beyond.
“In the populist world of the West,” she said, “that wouldn’t fly.”
Jonah Newman contributed to this article.
Correction (5/21/2014, 5:01 p.m.): This article originally misstated the national rank of Michael A. McRobbie, president of the Indiana University system, in terms of his compensation. He is the seventh-highest-paid leader of a public college, not the sixth. The article has been updated to reflect this correction.
