Private-College Presidents Enjoy Another Lucrative Year

George Roche, who left Hillsdale in a scandal in 1999, led the way with $1.2-million

By JULIE L. NICKLIN

What's a college president worth these days? If the 2000 fiscal year was any indication,

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the priciest ones cost more than $600,000, thanks to retirement packages, raises, and bonuses that are getting bigger by the year.

That's according to an annual Chronicle survey, which also showed that not only did it pay to stay at an institution, but in some cases, it paid even more to leave -- whether on good terms or bad.

In the 2000 fiscal year, the highest-compensated chief executive of a private college was George C. Roche III, who walked away with $1.2-million in salary and benefits when he resigned from Hillsdale College in November 1999, amid rumors of an affair with his daughter-in-law. His resignation came just days after she had committed suicide on the campus. (While Mr. Roche has not publicly commented on the reports, he has in letters denied any wrongdoing.)

Mr. Roche had been president of the conservative college in Michigan for 28 years, and had turned it into a fund-raising powerhouse.

He was followed on The Chronicle's list of highest-compensated private-college presidents by two other departed presidents, Richard L. Rubenstein, of the University of Bridgeport, and Victor P. Meskill, of Dowling College, who received a total of $832,492 and $788,430, respectively.

You have to drop to the No. 4 position to see who received the highest compensation and is still in the same job -- Judith Rodin, president of the University of Pennsylvania, who earned $698,325.

In all, 86 presidents earned $300,000 or more in the 2000 fiscal year, an increase of 16.2 percent from the year before. Of those, 12 made $500,000 or more, up from 7 in fiscal 1999; 30 received $400,000 to $499,999, up from 21. The number earning $300,000 to $399,999 dropped slightly, to 44 in 2000, from 46 in 1999.

The increases bother some in academe. They believe that the presidents' jobs are a public service, and that the salary levels, especially those at private colleges, are growing faster than those of faculty members.

According to The Chronicle's survey, the average salary of a private-college president was $207,130 in the 2000 fiscal year, up 11.2 percent from $186,255 the year before, among institutions that were included in the survey in both years.

During roughly the same period, the average faculty salary at private and public colleges increased 3.7 percent, from $56,282 in the 1998-99 academic year to $58,352 in the 1999-2000 academic year, according to the American Association of University Professors.

Critics blame college trustees and executive recruiters for pushing college presidents' salaries and benefits up.

"There's just a ratcheting effect that's called a market effect, but whether it's real or manufactured is hard to tell," says Patrick M. Callan, president of the National Center for Public Policy and Higher Education, based in San Jose, Calif. "It puts pressure throughout the system to do more and more."

When Mr. Roche retired in November 1999, his $97,632 partial-year salary got a $906,000 bump from a payout of deferred compensation.

Hillsdale officials would not disclose how long the institution had been setting aside a portion of Mr. Roche's salary. But tax forms indicate that in the three fiscal years prior to 2000, Mr. Roche each year had received a salary between $163,000 and $185,000, and benefits of more than $300,000, including pay that was being deferred.

Compensation experts called those amounts unusually large, saying it appears the college was trying to play "catch up" for a president who was nearing retirement; he was 64 when he left Hillsdale.

"They were paying him huge bonuses that would be outside the parameters of an institution's peers," says Raymond D. Cotton, a lawyer in Washington who negotiates compensation packages for colleges and their presidents. "That is so far out of bounds. When you see numbers like that, that is a flashing light to say 'What's going on here?' That is not normal."

Mr. Roche, who now lives in Ouray, Colo., declined to comment. But H. Kenneth Cole, Hillsdale's vice president for finance, says the deferred compensation plan "wasn't a last-minute thing."

It was designed "a number of years" ago, he says, "to repay Dr. Roche for the years he was here and the successes the college had had."

Bridgeport's Mr. Rubenstein, who holds the No. 2 position on The Chronicle's list, saw his salary alone jump to $814,125, from $169,125, when he retired in December 1999, after five years as president of the financially challenged institution.

In the early 1990s, a group supported by the Rev. Sun Myung Moon's Unification Church rescued the university from closure, and has since pumped in more than $115-million to keep it on its feet.

Bridgeport officials are quick to point out that the bulk of Mr. Rubenstein's salary in the 2000 fiscal year was not cash, but rather a paper transaction that involved a unique housing deal.

In 1995, when the college asked the 70-year-old retired Florida State University religion professor and then-chairman of Bridgeport's Board of Trustees to become its president, he was reluctant to give up the financial security he and his wife had established in Jacksonville, Fla., to start over in the more-expensive Connecticut. The board felt it had to ensure that the couple would be on equally secure financial footing when he retired from Bridgeport.

So the board struck a deal in which Mr. Rubenstein sold his house in Florida and put the proceeds in escrow. The university bought him a comparable -- but more expensive -- house in Connecticut. At the end of his five-year term, he could buy the house for whatever his money had appreciated to in escrow. Officials won't release exact numbers, but they say the jump in his 1999-2000 salary is largely the difference between the appraised value of the house and the amount he paid for it.

"It was a nice arrangement for him, but if you just see it in numbers, it looks like someone walked out the door with a big wad of cash, and that's just not true," says the current president, Neil A. Salonen, who was chairman of the trustees during Mr. Rubenstein's presidency.

Mr. Meskill, who ranks No. 3 on The Chronicle's list, received $773,800 in salary and $14,630 in benefits in the fiscal year in which he resigned from Dowling College. Mr. Meskill was president of the largely commuter campus on Long Island for 22 years, but came under fire late in his tenure for trying to transform Dowling into an elite, residential college, and to create an international aviation center. He resigned in November 1999.

Dowling officials declined to discuss his compensation, as did Mr. Meskill. In the previous year, 1998-99, Mr. Meskill received $451,779, making him the highest-compensated president of a master's institution.

Ms. Rodin's $698,325 compensation in the 2000 fiscal year marked a 6.5-percent raise from the $655,557 she was paid the previous year. Trustees argue that to get -- and keep -- the best leaders, they have to pay top dollar.

"By all the metrics that we use to evaluate her on a personal and professional level, she ranks right at the top, and we're comfortable with paying her right at the top," says James S. Riepe, chairman of Penn's Board of Trustees.

Presidential recruiters say it is no surprise that Ms. Rodin, who has been at Penn for seven years, was the best-compensated continuing president.

"The institution has to know that she'll be on lists of people like me, and that other institutions will try to recruit her away," says Jean Dowdall, a vice president of A.T. Kearney Executive Search, which helps colleges recruit senior administrators.

Replies Penn's Mr. Riepe: "There's not a pot of gold [Ms. Rodin] will get if she stays. It's just important for her to be paid fairly for services provided."

Fair, he says, falls somewhere between pay for public service and the private sector.

The highest-profile public servant, George W. Bush, makes $400,000 as president, thanks to legislation Bill Clinton signed before leaving office. It marked the first presidential pay raise since 1969. Mr. Clinton was paid $200,000.

In that same fiscal year, Peter H. Coors, the president of the Adolph Coors Company made $1,369,209; the company's sales totaled roughly $2.4-billion, about the same as Penn's budget. At other companies reporting similar revenue, Donald E. Graham, chief executive officer of The Washington Post Co., brought in $583,454, and Frank L. Salizzoni, then chief executive officer of H&R Block, made $889,341. These figures do not include stock options.

Rounding out The Chronicle's list of the Top 10 highest-compensated presidents were New York University's L. Jay Oliva, who received $650,746; the Johns Hopkins University's William R. Brody, who received $623,240; Columbia University's George Rupp, who earned $562,610; Yale University's Richard C. Levin, who received $561,709; Vanderbilt University's then-chancellor Joe B. Wyatt, who was given $549,741; and American University's Benjamin Ladner, with $543,676.

All of the above are still at these institutions, except Mr. Wyatt.

While some of those names have appeared on The Chronicle's Top 10 list time and again, it was the first time that American's Mr. Ladner made it, thanks to a $195,544 increase from the previous year.

The university's trustees had commissioned a top-down review of all salaries, and concluded that the president was underpaid, compared with what his counterparts were making at neighboring institutions, and those American considers its peers or aspires to have as peers, including Bucknell, Georgetown, George Washington, and Princeton Universities, and Penn.

So the trustees gave his salary a jolt to push it to a more competitive level, and to reward him for a job well done over the past five years.

"I want the compensation to reflect what he does, to compensate him for the job he's doing, and to make sure it's enough to keep him," says George J. Collins, chairman of American's Board of Trustees.

The size of a university's budget doesn't seem to correlate to a president's pay. If it did, then Harvard University's president would rank near the top. Instead, in the 2000 fiscal year, then-President Neil L. Rudenstine earned a total of $380,272, or .02 percent of the university's $2-billion budget. That put him lower on the pay list than Thomas E. Corts, president of Samford University, who earned $393,841, or .44 percent of that institution's $89-million budget. Mr. Rudenstine also trailed Anthony J. Cernera, Sacred Heart University's president, who received $383,884, or .50 percent of the institution's $76-million budget. Harvard officials declined to comment.

According to The Chronicle's survey, presidents of doctoral universities received a median salary of $331,727 in fiscal 2000. Presidents of master's institutions earned a median salary of $163,505, and those of baccalaureate colleges, $194,407.

The medians are not directly comparable to those reported in previous years because the samples of institutions differ. Institutions in the current survey are categorized under the new classification system adopted last year by the Carnegie Foundation for the Advancement of Teaching. The new classification added more than 110 institutions to The Chronicle's survey; the presidents of those institutions, for the most part, earned in the $100,000s and $200,000s.

The figures for pay and benefits were taken from a federal tax return, called the Form 990, that private institutions are required to make available upon written request. Public institutions are not required to file the forms.

The forms do not include how much presidents receive from working as outside consultants or on outside boards.

Outside of the president's office, medical professors, surgeons, and hospital directors were the highest-compensated professionals in academe. Twenty-three earned more than $1-million.

At the head of the pack, by far, was William N. Kelley, who received $7.8-million when he was asked to step down as chief executive officer of Penn's health systems and medical center, with seven years left on a 10-year contract. His benefits of $5.9-million represent a payout of his contract that is being distributed over seven years.

Mr. Kelley, who remains on the faculty, had been head of Penn's health system since the mid-1980s, but in recent years, Penn's hospitals were among the biggest money losers of any academic medical centers. The board felt "a change in leadership was necessary" says Mr. Riepe, chairman of Penn's board. "The university had an obligation to make good on. It's fair pay on an annual basis."

Following at a distant second was James L. Cox, chairman of cardiovascular and thoracic surgery at Georgetown, who made $2.7-million; James A. Grifo, a professor of obstetrics and gynecology at NYU, with $2.2-million; and Edward Manche, a professor of ophthalmology at Stanford University, who brought in $2.1-million.

There were some unlikely big earners. One was R. Bruce Journey, publisher and chief executive officer of the Massachusetts Institute of Technology's alumni magazine since 1996. In the 2000 fiscal year, Mr. Journey's salary and benefits skyrocketed to $906,787 -- $554,439 more than what he had made the year before. Under a contract he signed with the alumni association in 1998, his compensation is based on increasing advertising revenue and circulation. According to MIT officials, the magazine's circulation has more than tripled since its redesign in 1998, as Technology Review.

National University listed a trustee -- John Bucher -- as one of its highest-compensated officials, pulling in $424,382. Kevin Casey, the university's vice president for administration and business, says that Mr. Bucher did not receive this money for his services as a trustee, but as a real-estate broker.

Mr. Casey acknowledges that doing business with a trustee might give the appearance of a conflict-of-interest. But, he says, the university had this relationship with Mr. Bucher even before he became a trustee in 1996, and that the university checked commissions paid to other brokers in the region and found that Mr. Bucher's were at the low range.

Mr. Bucher stresses that he is not on the university's payroll, but rather receives commissions on the purchasing and leasing of property by the university. The trustee also recuses himself from any board discussions involving his business, university officials say.

"I feel confident we have addressed any areas of possible concern," Mr. Casey says.

The Internal Revenue Service declined to comment on the compensation of any individuals disclosed in this survey, and what might be appropriate or inappropriate. An official would only say that in monitoring compliance, the IRS would question who is setting the compensation, what guidelines they are using, and what the norm is for the job involved.

"You have to measure the total package in terms of fair market value," the official says. "You don't look at pieces of something; you look at the whole thing."

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