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December 9, 2010

2-year pay freeze end for Pitt senior officers

Trustees this week increased the compensation of Chancellor Mark A. Nordenberg and five other senior officers for fiscal year 2011, ending a two-year salary freeze for the senior administrators.

In a two-step process, the Board of Trustees compensation committee first awarded each officer the 2.5 percent salary pool maintenance component of the 2009 fiscal year compensation budget increase. While staff and faculty received an increase that year, senior officers voluntarily agreed to frozen salaries, noted committee chair Stephen R. Tritch. (See University Times Dec. 4, 2008.)

That move effectively created a new fiscal year 2010 base salary for each of the officers. According to the resolution passed by trustees at a conference call meeting Dec. 6, “This adjustment will result in no retroactive payments for fiscal year 2009 or fiscal year 2010 but will increase each officer’s base for future salary increases.”

The trustees then approved raises on the new base salaries ranging from 3.2 percent to 4.9 percent. (See chart below.)

Nordenberg’s salary for FY11 was increased 3.2 percent on his adjusted fiscal year 2010 base salary, to $486,500.

At Nordenberg’s recommendation, officers’ adjusted FY10 salaries were increased as follows:

Jerome Cochran, executive vice chancellor, 3.7 percent to $412,500;

B. Jean Ferketish, secretary to the Board of Trustees and assistant chancellor, 4 percent to $202,500;

Arthur S. Levine, senior vice chancellor for Health Sciences and dean of the School of Medicine, 3.5 percent to $745,000;

Amy K. Marsh, treasurer, 3.7 percent to $340,000, and

Arthur G. Ramicone, vice chancellor for Budget and Controller, 4.9 percent to $285,000.

Raises are retroactive to July 1, the beginning of fiscal year 2011.

(The FY11 salary of Provost Patricia E. Beeson, whose appointment was effective Aug. 15, already had been set by the trustees at $325,000.)

Tritch, who also chairs the Board of Trustees, said, “One important dimension of the board’s oversight and support responsibilities … is to ensure that the officers of the University are fairly compensated — mindful of the norms of the academic culture, the metrics of the marketplace and financial circumstances that may exist at any particular time. … The officers of the University have continued to perform at very high levels, helping the University to meet a number of daunting challenges while maintaining its enviable record of progress.”

Tritch noted that salaries were frozen for all employees, including senior officers, in fiscal year 2010. He said the salary percentage increases for the officers are in line with the current fiscal year’s salary pool, which was 3 percent (2 percent to be distributed for salary maintenance of employees whose work performance during FY10 was rated at least satisfactory and 1 percent for merit, market and equity adjustments).

Tritch said, “Average salary increases already awarded have exceeded the size of the salary increase pool, with an average faculty salary increase of 4.4 percent.” He further noted that as has been Nordenberg’s practice, “the chancellor has requested that any salary increase awarded to him be the lowest percentage increase within the officer group and not markedly exceed the general salary increase pool.”

Pending further study, the trustees committee also tabled the retention incentive program, which since 2002 has provided bonuses to certain officers who remain in their jobs through a designated timeframe.

Under the initial five-year plan, designed to encourage four members of Pitt’s senior leadership team to remain at the University, trustees awarded Nordenberg $75,000 a year through June 30, 2007, if he remained in his position through that date. Then-Provost James V. Maher, Cochran and Ramicone each were awarded bonuses of $50,000 per year under the same conditions.

In December 2006, the compensation committee voted to extend the retention pay plan on an annual basis.

As explanation for the trustees’ current action, Tritch said, “In the most recent study undertaken by the [committee’s compensation] consultant, total compensation, including annual retention incentive payments, ranged from 14 percent to 28 percent below the benchmark for the three officers now participating in the program, which is consistent with media accounts of compensation levels at other universities.”

He continued, “When a new provost was appointed, the committee decided to focus on a competitive base salary rather than extending the retention incentive program to a new participant. Any modifications to the retention incentive program must be crafted so that the total compensation packages of the three officers who continue to participate in it, which already are below their benchmark, are not further diminished. However, it is not clear that maintaining the retention incentive program continues to be the most appropriate structure for delivering compensation to these officers.”

The compensation committee then authorized Tritch, working with the committee’s consultant, to explore modifications and make appropriate changes to the program.

In addition to salary, Pitt senior officers 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 the salary rounded up to the next higher thousand; up to $5,000 per year for health care expenses not covered by basic insurance; up to $5,000 per year for tax preparation and financial planning services, and initiation fees and monthly dues for selected clubs.

Commenting on the trustees’ actions, University Senate President Michael R. Pinsky said he supported the compensation committee’s decisions regarding administrators’ pay increases.

“I base this opinion on the fact that the senior administrators experienced a salary freeze for the past two years. Furthermore, considering the size of the institution and the breadth of responsibilities and success the leadership has enjoyed over the past two difficult years, these raises are appropriate,” Pinsky said.

“The only issue I would take with the [compensation committee’s] report is [their choice of comparable] institutions, which, I believe, also includes private universities, whose pay scales are not commensurate with public universities. Thus, I would hope that the board continues to give the senior administration salary raises annually, but at the same level as that given to the University faculty for the same years.”

Staff Association Council President Gwen Watkins said, “Recognizing the significant challenges that the officers of the University have led the University through and considering that they have not received a salary increase for the past two fiscal years, the adjustment of their base salary level by restoring the salary maintenance component of the FY09 salary pool is an appropriate and equitable action by the Board of Trustees.”

She continued, “In addition, the salary increase percentage approved for each officer for fiscal year 2011 is fair and reasonable. With the long-term success of the University as our No. 1 goal, it is important that University leaders are appropriately compensated when compared to our peer institutions.”

John Baker, chair of the Senate budget policies committee, said that given the high-quality job performance of the senior officers, they deserve to be compensated appropriately for their efforts within the context of the annual salary pool increases for employees for the previous two and current fiscal years, which were 4 percent, 0 percent and 3 percent.

“The raises that our senior administrators were awarded for FY11 (3.2-4.9 percent), plus another 2.5 percent for each in back compensation for FY09, are appropriate when taken by themselves.

“However, it should not be forgotten that these raises are given with additional annual bonus payments of $50,000-$75,000 per year — amounting to another 7-19 percent per year depending upon the officer — which is more than many staff and faculty make annually,” Baker said.

“The justification for these bonuses is that our senior officers are underpaid by 14-28 percent relative to their peers. This assessment comes from non-public information provided by a private consultant. The trustees should reveal the universities included in the consultant’s study, because it does not agree with public information in The Chronicle of Higher Education unless based upon selected universities, especially private ones,” he said.

Baker noted that for many years faculty salaries at Pitt have been compared specifically to public members of the Association of American Universities, not the entire AAU membership.

He continued, “If we are going to use private universities in our peer group for senior officers, we also need to be using private universities in our peer group for faculty and staff. Most faculty and staff who perform satisfactorily or better do not receive the average 5.2 percent (2009) or 4.4 percent (2011) pay raises,” cited by the trustees. “In fact, the raises of most faculty in most years do not exceed the pool increase,” he added.

“This is not meant as a criticism of our senior officers. They do indeed perform their jobs well. The point is: So do most faculty and staff, yet they do not receive similar compensation increases, especially when the dollar amounts are examined,” Baker said. “Four percent at $300,000 per year is $12,000, plus a $50,000 bonus on top of it. Four percent at $60,000 per year is $2,400, plus a $0 bonus. If the trustees want Pitt to remain competitive with its peers, they should be concerned about keeping faculty and staff salaries competitive with peers, not just senior officers’.”

Trustees also approved title changes for two senior officers.

Ramicone’s title now is chief financial officer; Marsh’s title is chief investment officer and treasurer.

According to Tritch, the moves were needed for clarity, because the former titles “failed to convey a sufficiently clear sense of the responsibilities discharged by each officer.” No responsibilities for the two positions will change as a result of the new titles, he added.

—Peter Hart


Filed under: Feature,Volume 43 Issue 8

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