Private-college presidents often have company at the top of the pay scale, including law-school deans, coaches, and medical-center staff. But another group of employees may also join them among the highest-paid on campus: former officials.
A Chronicle analysis found that 85 of the 419 private colleges included in this year’s review of federal tax forms were paying at least one former official or key employee more than $200,000 in compensation in 2007-8. Several colleges had as many as four such highly paid people still drawing paychecks.
Most of those ex-officials are former presidents who received deferred compensation after their retirement, because colleges had offered them the deferred pay as a retention or performance bonus. Other former administrators receiving compensation may still be employed as faculty members. Federal tax forms require that former top managers be listed in this category even if they remain on the staff in some reduced role.
But other job titles surfaced, including former provosts and university hospital leaders. And in at least one case, a college was paying a former official who had moved on to a new institution.
John J. Neuhauser, president of Saint Michael’s College, in Vermont, received compensation from two colleges in 2007-8. Mr. Neuhauser stepped down as academic vice president and dean of faculties at Boston College in 2005 and left the faculty in 2007 for Saint Michael’s. That year he received $703,542 in salary and severance from Boston College and $307,492 as president of Saint Michael’s.
Mr. Neuhauser’s Boston College package includes “accumulated tenure-related benefits based on 37 years of service,” according to a written statement from the college.
Boston College also lists $377,604 in compensation for Francis B. Campanella, a former executive vice president, who returned to the faculty as a finance professor in 2001.
The review of federal tax forms shows that deferring compensation is common across higher education, and not just for presidents. The practice has several benefits. Deferred compensation can be invested while it accumulates, and neither the recipient nor nonprofit colleges pay taxes on the payment. And because deferred compensation typically comes with a substantial risk of forfeiture, the taxes are postponed until the payments are actually received. That means the recipient can stay in a lower tax bracket while on the job, says Rian M. Yaffe, a compensation consultant who works with colleges.
In many cases, colleges structure the payments so that a president or other highly compensated employee receives retirement payments over two or more years, thus preventing the higher tax-bracket bill that a single payout would draw.
George E. Rupp, a president of Columbia University who retired in 2002, continued to reap the payouts of his golden parachute five years later. Mr. Rupp, now chief executive of the International Rescue Committee, received $450,000 from Columbia in 2007-8 as part of his retirement agreement, according to university officials.
Mr. Yaffe says deferred compensation is geared toward tax planning and is “really a retirement benefit.”
Top Earners
Not surprisingly, the biggest earners in the former-official category served as presidents. Stephen J. Trachtenberg led George Washington University for 19 years before stepping down to return to the faculty in 2007. Mr. Trachtenberg, who is 71, received almost $3.7-million in the 2007-8 fiscal year.
Following Mr. Trachtenberg in the top 10 was Nancy S. Dye, who announced her resignation as president of Oberlin College in September 2006. She did so just after a group of faculty members called for her ouster. She received about $1.5-million in 2007-8.
In both cases, the presidents received deferred compensation that had been set aside on an annual basis as part of their contracts. The bulk of that money counted toward their pay in annual tax filings, as well as in previous Chronicle executive-compensation reports. So it was essentially counted twice, per the Internal Revenue Service’s reporting requirements.
For example, Mr. Trachtenberg’s $3.7-million comprises deferred compensation and accrued sabbatical leave. But that total also includes a chunk of the $107,000 listed on university tax forms as his benefits and deferred compensation in 2006-7, when he earned a total of $798,827, as well as similar payments in his previous 18 years on the job.
A university spokeswoman called the annual payments a longevity bonus, which George Washington’s Board of Trustees created as an incentive to retain Mr. Trachtenberg. As for the sabbatical component of the $3.7-million, she says, the former president chose not to take leave time that is commonly offered by the university to veteran faculty members and administrators, “because he did not want to interrupt his work as president.”
Several compensation experts say the total amount of Mr. Trachtenberg’s payout meets market expectations, given his long tenure and the substantial transformation he led at George Washington. Under his tenure the university saw major improvements to its academic reputation and campus footprint, and Mr. Trachtenberg left a $1.2-billion endowment, up from $200-million when he arrived.
Sheldon E. Steinbach, a lawyer in Washington for the firm Dow Lohnes, who represents colleges and universities, says Mr. Trachtenberg’s payout is “quite in line” for a long-serving president who ran a complex private university with a health center.
Mr. Trachtenberg says the university’s governing board created his deferred-compensation plan when he arrived so he would be able to use the payout to purchase a home in Washington’s pricey real-estate market when he retired (he was provided a university-owned home when he was president). The final payment may have been larger than expected because Mr. Trachtenberg stayed almost twice as long as the decade-long timeline the board used in creating the benefit.
“Who knew I was going to last 20 years?” he says. “I made my life here.”
The former president remains on the campus as a professor and president emeritus, and also works as a search consultant. He teaches classes, gives speeches to campus groups, and says he lends a hand when his successor, Steven Knapp, deems it appropriate. He has also made substantial monetary donations to the university.
Ms. Dye is also a long-serving former president. She stepped down in June 2007 after 13 years at Oberlin. In 2002 the college’s Board of Trustees granted her deferred compensation of $100,000 in annual payments for up to 10 years. University officials said at the time that the plan was intended to retain Ms. Dye for another decade.
Ronald R. Watts, Oberlin’s vice president for finance, says Ms. Dye would have lost the entire deferred account if she had resigned earlier. He says investment income accounts for 30 percent of the final payment of approximately $1.5-million—money the college did not shell out.
The payout “reflects eight years of a deferred- compensation agreement,” Mr. Watts says.
Raymond D. Cotton, a Washington-based lawyer and expert on compensation in higher education, says deferred compensation is often used by governing boards to reward successful college leaders who are well into their careers. But it can get expensive if boards wait too long to craft a plan.
“I encourage boards to set aside smoothly, each year,” he says of deferred payments.
