Corporatization and Administrative Bloat: “Gilded Goodbyes”

In previous posts, I have detailed Gordon Gee’s extraordinary compensation as President Emeritus of Ohio State, as well as the fact that the only two public university administrators whose compensation exceeded his in 2012 were Graham B. Spanier of Penn State and Jay Gogue of Auburn, both of whom have also retired—Spanier under considerably more fire for his role in covering up Jerry Sandusky’s serial child abuse than Gee received for his derogatory comments about other universities whose football teams have been ranked ahead of the Buckeyes. Notably, Spanier’s base salary for his final year as the President of Penn State constituted only 12.1% of his total compensation for that year, and Gogue’s for his final year at Auburn, only 19% of his total compensation.

Nonetheless, it seems that Gee’s hanging on in a reduced and overpaid role is becoming more the model than Spanier’s and Gogue’s very large but one-time payouts. I have stolen the subtitle of this post from an article that appeared in the Boston Globe. Written by Todd Wallack, the article delineates the post-retirement compensation received by former Brandeis president, Jehudas Reinharz. Although Reinharz reclaimed his old office in the history department, there is no record of his doing any teaching, supervision of graduate theses, or departmental service over the three years since he retired from the presidency of the university. Yet, he has been receiving $600,000 per year, making him the second most highly paid employee at the university. In fairness to Reinharz, his compensation from the university declined to $500,000 in 2011, further declined to about $285,000 for the years from 2011 to 2014, and will thereafter be $180,000 per year to compensate him for being a “half-time professor.” But, in addition to what he earns directly from the university, Reinharz has been named the president of the Mandel Foundation, which has contributed more than $50 million in external funding to the university over the last two decades, and he is reportedly receiving another $800,000 per year in that role.

But although Wallack devotes much space to Reinharz’s compensation in retirement, he doesn’t focus solely on Reinharz. He highlights the deals brokered by other university presidents across New England. As president emeritus of Tufts, Lawrence S. Bacow received $1.7 million in 2011. Over the last half-decade, Wellesley College has had two emeritus presidents, paying one of them $430,000 per year for two years after her retirement.  After resigning as president of Harvard in 2006, Lawrence Summers received $580,000 per year for several years, even though he was earning millions of dollars in his subsequent position with a hedge fund. When Jack Wilson stepped down as President of the university of Massachusetts, he was granted a sabbatical to prepare to return to a regular faculty role. But he received his presidential salary of $425,000 during that sabbatical year, and he is now receiving $269,000 per year as a faculty member. Since resigning from the presidency of Northeastern University in 2006, Richard M. Freeland has received a pension of nearly $270,000 per year, plus a stipend of $30,000 for teaching a single history course each year.

And, as Wallack points out, Gee et al are following the example set by John Silber. When he stepped down as President of Boston University, the university resurrected the long-defunct position of Chancellor and paid him several hundred thousand dollars per year until 2003, when they capped his post-retirement compensation with a $6.1 million payout.

Writing for the Kansas City Star, Mara Rose Williams has reported that before Brady Deaton retired as Chancellor of the University of Missouri, the university created the Brady and Anne Deaton Institute for University Leadership in International Development, which he will head for an annual salary of $200,000.

In the summer of 2013, when Bowen Loftin was preparing to step down as President of Texas A&M University, he also arranged to head a newly created institute for him to head for very generous compensation–in his case an Institute for Advanced Modeling and Simulation (IAMS). But whereas Deaton’s deal did not become a matter of controversy until its final details became public, Loftin’s wrangling with Texas A&M’s Board of Trustees over the details of his post-retirement deal became public and the process as well as the result came under public scrutiny. Predictably, the Board of Trustees wanted to put the issues to rest and minimize the unfavorable publicity. So they finalized a deal with Loftin that superficially seems to give him considerably less than what he asked for, but, if you add up all of the numbers, actually gives him most of what he asked for. The following chart comes from an article written by Kelsey Magliolo for the Aggie Guardian:

Loftin Chart_Page_1

Loftin Chart_Page_2

Kansas State President Jon Wefald stepped down ahead of the release of an audit that showed hundreds of thousands of dollars in inappropriately reported and in many instances inappropriate payments to some of those responsible for administrating the university’s athletics programs. After he stepped down in 2009, Wefald continued to receive his base salary as president for two years, then about 60% of his base salary thereafter. His major project has been the writing of a book tentatively titled The

Turnaround Years at K-State: The Years of President Jon Wefald from 1986 to 2009. Exhibiting some degree of defensiveness over this arrangement, Wefald told Willims, “’One thing I did not expect is how time-consuming this would be. They are not just giving money away. I’m working seven days a week. This is important. A history of K-State.”

In the same year that Wefald stepped down as president of Kansas State, Robert Hemenway retired as President of Kansas University. After taking a year’s sabbatical, he rejoined the English Department for one year, teaching one class each semester and reportedly working on a book. For each of these years, he received his base administrative salary of about $340,000; then he did retire for good.

In July 2013, Michael Adams retired as President of the University of Georgia. In addition to a $600,000 one-time payout, over the next two years, Adams will receive $600,000 per year and then $258,000 per year for the three following years. Over those five years, he plans to teach and write–for more than three times the average annual compensation received by full professors at the university.

In 2012, when John Bardo stepped down as Chancellor of Western Carolina University, he continued to receive his administrative salary of $280,000 as he transitioned back to the faculty ranks by doing research. Then as a faculty member, he would receive $168,000 or 60% of his administrative salary. Given what other university presidents are making post-retirement, all of this sounds very modest. And it is, in fact, in line with new guidelines that the state legislature put in place to limit institutional largesse to their outgoing presidents. But over the final four years of his 16-year tenure as president, Bardo oversaw more than $30 million in cuts that necessitated the elimination of some faculty positions, the combination or elimination of academic programs, and a steep increase in tuition. Although much of that austerity was, no doubt, necessitated by economic realities that he could not control, when he rejoined the faculty ranks full-time, he was scheduled to make more than twice the average salary for a full professor at the university, which was just over $74,000 per year. And faculty at the university had not received a salary increase for the four previous years.

Last year, when Richard McCormick stepped down as president of Rutgers University, he rejoined the faculty at a salary of $335,000 per year. That made him the most highly paid faculty member within the university—because his contract specified that if he stepped down as president and rejoined the faculty, he would become the most highly paid faculty member within the university.

In 2008, when Earl S. Richardson stepped down as President of Morgan State University, his contract stipulated that he would be retained as President Emeritus at an annual salary of $300,000 per year. Richardson has served for 24 years and was arguably one of the most successful presidents that that university has ever had. And in terms of its financial details, his post-retirement arrangements were not much different from those in the contracts for the presidents of the University of Maryland and several other smaller and less well known institutions in the state, such as Salisbuty University. But. As the Baltimore Sun reported, what made Richardson’s contract very unusual was that it included a clause that said that he would receive the same post-retirement compensation even if he were forced out as president for “incompetence or misconduct.”

Richardson was apparently trying to avoid what happened to Evan Dobelle, the former President of Westfield State University in Massachusetts. According to Boston Globe reporter Lawrence S. Bacow, “Dobelle retired without any severance after the board

placed him on paid leave to investigate his spending and rejected his request for a sabbatical and faculty position. But Dobelle is continuing to push forward with a lawsuit against the school and others seeking additional compensation.”

In his article “College Presidents after They Leave,” a survey of the post-retirement compensation received by former presidents of universities in Massachusetts, Bacow reveals but does not seem to recognize the implications of one of the mechanisms for inflating presidential severance packages: almost all of the outgoing presidents whom he lists have received compensation for untaken year-long sabbaticals at their full presidential salaries. Putting aside the fact that full-year sabbaticals at full pay are not anywhere close to a universal practice, the outgoing presidents are exploiting one of the few remaining perks of being a tenured faculty member, even though in every other way their compensation and benefits exceed what any faculty member receives and even though there seems to be no assumption that their sabbaticals will result in the sort of scholarship that faculty members are expected to produce to justify the awarding of the sabbatical in the first place.

These “gilded goodbyes” are very indicative of, rather than atypical of, the broader pattern in the compensation of retiring presidents at both public and private universities. And I think that it is very important to focus public attention on what these presidents are receiving as they retire because the same corporate leaders and political figures who sit on the Boards of Trustees that are approving those packages have often been among those raising the most strident alarms about the impending “crisis” about both public and corporate pension liabilities. Only those with a deeply ingrained sense of personal privilege will be inclined to dismiss such hypocrisy as a faulty comparison or as a exhibition of the overplayed and dated Marxist concept of “class warfare”—wholly ignoring that promoting extreme income inequality is, in fact, top-to-bottom class warfare.

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