Tuesday, November 20, 2007

Gee, Gordon, That's Great

November 20, 2007


Re: Gee, Gordon, That’s Great.


Dear Colleagues:

Ya gotta love it, baby. It shows once again that money talks and bovine defecation walks. It shows once again that Milton Friedman, he of the huge (if distorted) mind and pygmy moral sense, was right, and so was Ronald Reagan, the sainted gipper of minimal mind and tiny moral sense: in America, it’s money uber alles, in fact, its money ist alles.

What am I referring to? Well, I am referring, of course, to the latest annual issue of money in academia, The Chronicle of Higher Education’s November 16, 2007 survey of the compensation paid to presidents of all sorts of public and private colleges, universities, and specialized schools.

The Chronicle has outdone itself this time (or maybe I just fail to recollect that it has done the same thing previously). This time it has an entire “pull out” section, called Executive Compensation[,] What Leaders Make, with all the juicy information. It is just like the juicy pull out sections from the National Law Journal with pertinent financial and size information about The 250 Largest [Law] Firms, and is not so entirely different from certain issues of the New York Times Magazine devoted to a single topic like well dressed men whom women love or gorgeous women who do this or that. The front page of “Executive Compensation” is, naturally, a lure, with pictures of ten heads of academic bodies and their salaries, which in four cases are north of 700 thousand, although pity the poor (in both senses of the word) priest-president of St. Louis University, whose salary is said to be zero, nada, nothing, zip. Pity also the head of the Nevada System of Higher Education, whose compensation is said under his picture to be 26 thousand bucks. The Chronicle doesn’t tell you, however, that he is filthy rich and has given hundreds of millions of dollars to academic institutions.

Inside, the Section is just as juicy, maybe even more juicy, often showing that the academic world is hardly different from the commercial one, though still at a less munificent level. Purely in terms of statistics, there is a table showing the compensation of the Highest Paid Leaders of Public Universities, a table sometimes breaking down (so to speak) top earners by base salary, bonus pay, deferred compensation, payments for corporate directorships and retirement pay, and a semi table of Top Departure Pay For Public – University Leaders Who Stepped Down in 2006-7.

There is a semi table of Top Pay Among Private-University Presidents Who Stepped Down in 2005-2006, and bar graphs of Trends in the Median Compensation of Private-College Presidents. (By 2005 the median at research universities was north of half a mill.) There is a table of “Leaders in Total Annual Compensation at Private, Special – Focus Institutions 2005-6, where most of the leaders were the heads of medical schools. A couple of the docs earn well north of a mill, and from the table one is tempted to remark that any doc who heads a medical school but doesn’t make at least 600 thousand should get himself a brain transplant. One of his or her school’s neurosurgeons should be able to do it.

There are numerous other tables and semi tables. One compares the base (non-bonus) compensation of the presidents of universities with the salaries of their schools’ football coaches. It’s a scream. The coaches usually make two, three or four times what the presidents make. Mark Emmert, the president of the University of Washington makes 752 thou; Tyrone Willingham, who can hardly win for losing, makes 1.4 mill. At Virginia Tech, the president makes 659 thou, but the coach made 2.008 mill. At Texas the numbers were 599 thou and 2.66 mill. At Central Florida, the president made 584 thou, but Coach George O’Leary made 1.03 mill – and this although O’Leary was the guy who in effect got fired from Notre Dame as soon as he was hired, because he had lied on his resume. At Florida the president makes 441 thou, while Coach Urban Meyer (is there anybody named Rural?) was paid 1.52 mill. At Michigan, the president’s base salary was 643 thou (she makes about 300 or 400 more in other ways), while Coach Lloyd Carr made 1.45 mill -- and he can’t even beat Appalachian State, not to mention his recent difficulties with that other State, the one from Ohio. At a mere 1.45 mill, it’s no wonder he quit.

The whole president/coach thing is, as said, an absolute scream. It reminds me of Babe Ruth’s comment when someone told him he made more money than President Herbert Hoover “I had a better year,” Ruth said. Obviously. The President was Hoover. Of course, unlike Ruth, the coaches don’t always have such a good year. But then, neither do the presidents quite often.

The tables often carry implicit humor, as you can see (if humor is what you call it). The articles can be even funnier in their way. One article, about the pay for presidents of community colleges, is entitled Community-College Chiefs’ Pay Lags Behind Presidents With Similar Loads. The presidents with similar loads are, I gather, the heads of four year universities. The top ten of them at public four year universities made in the high 600s, the 700s, and in one case the 800s. (One problem with the figures though is that they include not just salary, but deferred compensation, bonuses, and what not. So it is sometimes hard to make wholly valid comparisons.) At private universities presidents made more, sometimes close to two million, with other presidents making well north of “only” one million.

Sometimes, at both public and private universities the figures get messed up when payments made due to recent retirements are included (e.g., recent payments of deferred comp, annuities). When this happens, pay can be shown as four or five million in a given year, but this is misleading and one has to believe the Chronicle’s methods of showing compensation could not earn a passing grade in a basic statistics course because incommensurables are lumped together.

Nonetheless, the basic idea that people are getting a lot of jack comes through. And in the case of the president whose total comp was over four million due to some kind of additional payments upon retirement, it is perversely humorous that he was forced out for abusing his expense account. Such greed is worthy of a corporate CEO -- a Dennis Kozlowski maybe, with his amazing shower curtain, if I remember correctly.

Anyway, back to community college presidents. Median total compensation here is said to be “only” something over a quarter million, although there are some who make between 350 and 610 thousand a year. I loved a statement in the interview with one of these high rollers, named Phil, whose compensation was just over 400 thou; he is head of a community college in San Francisco (a city considered to be hardship duty, right?). The Chronicle said this fellow makes more than any other president of a large community college in California, and “His pay is a far cry from the $80,000 or so he made as president at Cape Cod Community College in the 1980s,” although he says his skills are too. ‘“Do I feel guilty at all about being one of the highest-paid college presidents in the country?”’, he asked. ‘“Absolutely not.”’

Way to go, Phil. Don’t be embarrassed. You should be paid 800, and you should say so. After all, as the article makes clear, you work hard. You’re always meeting with people. You’re not “one of the highest paid college presidents in the country; you’re only one of the highest paid community college presidents in the country. You deserve better. A lousy 400 thousand per year will not get you a house on Pacific Heights. Go for it -- be like Bob Woodward: tell them how great you are. Tell them you want at least a million and a half.

Then there is the article wholly devoted to Gordon Gee. Yep. A whole article devoted to one guy. He is the President of Ohio State University (or, more accurately, The Ohio State University, although the Chronicle does not seem to know this even though it is a newspaper about academia). Why would a whole article be devoted to one President, and be entitled, no less, The View From The Top: E. Gordon Gee Goes Public. It is not, I think, because in 2005-2006, the last year for which the Chronicle has figures for private universities (it apparently has 2006-2007 figures for public institutions), Gee made a cool 1.8 mill as President of Vanderbilt. (The President of Hopkins made more.) Nope, I think, rather, it is because Gordon has previously been the President of West Virginia, Colorado, Brown, Ohio State (the first time) and Vanderbilt, before returning to Ohio State for a second time. A cruel, misguided cynic might think Gee can’t hold a job. But that is dubious since people keep wanting him.

Some of the statements Gee made for the Chronicle are pretty funny, if perversely. “I am the senior university president in the country,” he announced. Well, there have been presidents for longer than Gee’s 28 years, the Chronicle said, but can anyone match his record of five different universities and six different presidencies? Only Kenny Lofton has moved around more, as far as I know. Anyway, can you imagine saying even in jest in an interview (because in print a jesting intent might not come through), “I am the senior university president in the country”? I don’t remember hearing anything like that since Muhammad Ali constantly proclaimed “I am the greatest.” He was. Is Gee?

Then, too, the peripatetic Gee “has promised that he is in his last presidency.” But this is “a claim he also made at Vanderbilt and [before that] at Brown.” So, understandably, Gee says that “I said it twice before” and “I’m not sure that even I believe myself.” Welcome to the club, Gordon. Get in line. There is a long list of people who don’t believe you. The sultans and sheiks are starting universities in such as Dubai and Qatar, you know. How do you feel about sand?

But Gee is not about money. (Don’t be misled by his 1.8 mill at Vanderbilt.) “After all,” says the Chronicle, “more-lucrative posts await, certainly in private industry.” ‘“If it was just about money, I could do substantially better,’” says Gee. Right. Private industry can hardly wait to hire as top dog a guy who tells you he will stay, but in reality, as shown by his record, will hit the road in a few years, maybe in two or three. Lack of stability and continuity -- that’s what private businesses want.

But, doubtlessly to prove it’s not about money, Gee points out that he will be making less at The Ohio State University than at Vanderbilt, with a pay package of about a million a year. (Can you live in Columbus on that?) However, he also “will be eligible for some form of performance based pay, the details of which he says have yet to be formally hashed out.” I am in the fortunate and unusual position of having learned, and being able to disclose to you, what the performance pay will be based on. Gee will receive a bonus of $1 million every year that Ohio State beats Michigan in the Horseshoe, and a bonus of $2 million if Ohio beats Michigan in the Big House. What’s more, every time Ohio beats Michigan in two consecutive years, the performance based pay will include an extra one million dollars the second year. If Ohio wins three straight years, this extra amount will be doubled, so that Gee will get an extra bonus of two million in the third year. The extra amount will double again to four million if Ohio wins a fourth straight year. And again to eight million in a fifth straight year. And so on.

The Ohio State Board of Trustees was reluctant at first to accept this basis for performance pay. Three of The Ohio State University’s Trustees had learned arithmetic, and were concerned that the bonus might end up bankrupting the university and maybe even the whole state of Ohio. After all the extra bonus would be $512 million in the eleventh consecutive year of victories over Michigan and $1.24 billion in the twelfth year. But finally the deal was done because Ohio’s Trustees decided that, what the hell, Michigan is bound to win sometime, maybe once every five or six years, so that the performance bonus will then drop back down to only the initial figure the next time Ohio beats Michigan (which should be the year after the loss). And if it costs Ohio an extra 16 mill because Ohio beats Michigan five straight years, the Trustees thought this was worth it. In fact, they voted that it would be worth it to beat Michigan 11 or 12 straight years even though this would cost Ohio over half a billion in the eleventh year and then over a billion in the twelfth year.

Upon hearing of this deal, the Michigan Trustees debated a motion to throw the Ohio State game for 20 straight years on the theory that this would bankrupt The Ohio State University and the whole State of Ohio, both of which would then go out of business so that Michigan would never have to worry about losing to Ohio State again.

One other little known fact is that, upon learning of Gordon Gee’s performance pay deal, the President of Michigan decided that it would be a pretty nifty way of increasing her own inadequate total compensation of a million a year. So she demanded the same performance bonus from Michigan’s Trustees as Gee is getting from the Ohio State Trustees. But the President of Michigan is no fool -- she didn’t get to be president of Michigan by being stupid. She didn’t demand a performance bonus for beating Ohio State. She demanded one for beating Appalachian State.

Being desperate to achieve this goal, and having no concerns that the performance bonus would constantly increase because of consecutive victories, Michigan’s Trustees immediately agreed to the president’s demand.*


* This posting represents the personal views of Lawrence R. Velvel. If you wish to comment on the post, on the general topic of the post, or on the comments of others, you can, if you wish, post your comment on my website, VelvelOnNationalAffairs.com. All comments, of course, represent the views of their writers, not the views of Lawrence R. Velvel or of the Massachusetts School of Law. If you wish your comment to remain private, you can email me at Velvel@mslaw.edu.

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