Skip to Navigation
University of Pittsburgh
Print This Page Print this pages

January 9, 2003

Trustees OK Pitt senior officers’ pay hikes

Trustees have increased Chancellor Mark A. Nordenberg’s salary to $390,000 — a raise of 13.9 percent, nearly matching the percentage increase in Pitt’s tuition this year.

In addition, the trustees’ compensation committee approved raises ranging from 5.4 percent to 10.8 percent for five other Pitt senior officers, as recommended by Nordenberg. See page 3.

To encourage Nordenberg and his administrative team to stay at Pitt, the compensation committee also awarded what it called “deferred retention incentive payments.”

The new bonus program will give Nordenberg $75,000 a year through June 30, 2007, if he doesn’t leave his job or get fired before then. Provost James V. Maher, Executive Vice Chancellor Jerome Cochran and Arthur G. Ramicone, vice chancellor for Budget and Controller, will get bonuses of $50,000 per year under the same conditions.

“Though the amounts are somewhat smaller, this plan is similar to those now in place at other universities,” said William S. Dietrich II, who as Pitt Board of Trustees chairperson chairs the board’s compensation committee.

About 25 percent of U.S. colleges and universities give their CEOs some type of deferred compensation, according to a survey by the Washington, D.C.-based American Council on Education.

In addition to salaries and deferred bonuses, Pitt senior officers also receive executive benefits that include: an automobile for personal and business use by the chancellor and by other officers as determined by the chancellor; personal liability insurance coverage of $5 million; group term life insurance and accidental death and dismemberment insurance policies, each in the amount of $50,000, plus three times salary rounded up to the next higher thousand (for each policy, officers may buy additional insurance so long as the plan maximum of $1 million — excluding the $50,000 basic policy — is not exceeded); up to $5,000 per year for healthcare expenses not covered by basic insurance; a maximum of $5,000 per year for tax preparation and financial planning services, and initiation fees and monthly dues for clubs where officers can entertain prospective donors and business associates.

The officers’ new compensation packages are retroactive to July 1, the beginning of Pitt’s fiscal year.

Dietrich said the pay raises and bonuses are intended to retain Nordenberg and his administrative team, while closing “an embarrassing gap” between Pitt officers’ compensation and that of officers at peer universities.

According to Dietrich, the gap was documented by a study of university executives’ compensation, commissioned by the board in July. The consulting firm Towers Perrin contacted 21 universities, of which 15 responded.

“It was clear that this great University was falling behind,” said Dietrich. He said Towers Perrin concluded that:

• Only one Pitt senior officer — Senior Vice Chancellor for Health Sciences and medical school Dean Arthur S. Levine, who was recruited from the National Institutes of Health in 1998 and whose salary was benchmarked by Chancellor Nordenberg at that time — is being compensated appropriately, compared with his counterparts at peer universities.

• Pitt’s provost, executive vice chancellor and vice chancellor for budget are being compensated “at levels measurably below their peers.”

• “The compensation gap between the chancellor and his peers is even more dramatic.”

Dietrich and other trustees praised the performance of Pitt’s leadership team since 1995, when the board appointed Nordenberg as interim chancellor.

Pitt’s successes since then in research, fund raising, campus construction, and recruiting of high-quality students and faculty have made its senior officers “attractive recruitment targets,” Dietrich said, “and each of these individuals has been approached about moving to other positions.”

Dietrich said he didn’t think any of the six officers has come close to leaving Pitt “but you don’t want to abuse their loyalty and dedication.”

The board chairperson would not say how much Towers Perrin was paid for its survey, but he said the funds came from Pitt, not private sources. “I don’t assume it was real cheap.…But I will tell you that whatever the cost was, and I’m sure it was reasonable, it was worth every nickel,” Dietrich said. He also refused to identify which universities were surveyed by Towers Perrin, saying that the schools provided confidential salary data on condition of anonymity. But Dietrich did say the schools were “principally public AAU [Association of American Universities] universities from the Middle West and Middle Atlantic regions” within a 500-mile radius of Pittsburgh.

“It wouldn’t take much imagination” to identify most of the 15 surveyed universities, said Dietrich. He would not say whether they included the closest neighboring research university, Carnegie Mellon — whose president, Jared Cohon, made $364,397 in base salary during 2000-01, the latest year for which his salary data is available.

Dietrich quoted a November report by The Chronicle of Higher Education on three recent public university compensation packages, each involving the recruitment of a sitting public university president or chancellor. These included the move by the University of Minnesota’s president to the University of Texas system for a compensation package valued by the Chronicle at $787,319 (including a base salary of $450,000); the move by the University of Louisville’s president to the University of Tennessee system for a compensation package that the Chronicle valued at $734,000 (base salary: $365,000), and the move of the University of Iowa’s president to the University of Michigan for a compensation package valued by the Chronicle at $677,500.

Median salary increases for college and university administrators outpaced inflation for the fifth year in a row during the 2001-02 academic year, according to the College and University Professional Association for Human Resources. CUPAHR’s survey reported a median increase of 4.7 percent in college administrators’ pay nationwide, compared with a 2.6 percent rise in the Consumer Price Index for the year ending in September 2001.

According to CUPAHR’s survey, the average base salary of a CEO of a doctoral degree-granting university system in 2001-02 was $267,148. Among CEOs of single institutions that granted doctoral degrees, the average base pay was $243,360. The survey also found that the average base salary among chief academic officers at doctoral institutions was $183,297. Among chief business officers at doctoral institutions, the average base salary was $158,000.

The Dec. 20 meeting of the Pitt trustees’ compensation committee was held via a conference call coordinated in 159 Cathedral of Learning, and “broadcast” by speakerphone to reporters who questioned Dietrich following the meeting.

One reporter asked whether the meeting had been timed to minimize publicity — being held on the Friday before Christmas, when most students and faculty were away from campus, and media reports of the compensation increases would appear in lower-circulation Saturday newspaper editions and on lower-rated Friday evening TV news broadcasts.

Dietrich dismissed that scenario. “I’m a guy who likes to do things early rather than late,” he said. Towers Perrin did not complete its report until late November, after which the compensation committee met twice to discuss it, said Dietrich. Late December was the earliest that the committee could act on the consultants’ recommendations, he said.

“I’m sure that everybody is going to know [about the officers’ compensation] and there was absolutely no thought that we were going to keep it a secret,” said Dietrich. “If we were, I’m not doing a very good job of it.”

— Bruce Steele

Filed under: Feature,Volume 35 Issue 9

Leave a Reply