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December 8, 2011

Retention pay rolled into salary of 3 Pitt senior administrators;

chancellor declines FY12 pay raise

Last year’s base salaries for three administrators were higher than approved last December because trustees decided to roll into the base pay the administrators’ end-of-year retention compensation.

That information was revealed Dec. 5 when trustees approved the fiscal year 2012 salaries of the chancellor and six senior officers.

Trustees said they had agreed to Chancellor Mark A. Nordenberg’s request that he not receive an increase in his salary of $561,500 for FY12. In December 2010, Nordenberg’s base salary for last year was set at $486,500 but trustees later rolled into that base salary the $75,000 that was part of an annual deferred retention incentive plan awarded to him each year for staying at his job through June 30.

(See Dec. 9, 2010, University Times.)

Under the same deferred-pay plan, two other senior officers, Jerome Cochran, executive vice chancellor and general counsel, and Arthur G. Ramicone, chief financial officer, each had retention compensation rolled into their FY11 base salary. At last year’s compensation committee meeting, Cochran’s base salary was set at $412,500, but later was increased by his $50,000 retention compensation; Ramicone’s salary was set at $285,000 last December, then increased by his $50,000 retention compensation.

Those changes in FY11 base salaries resulted from the compensation committee authorizing board chair Stephen R. Tritch to determine if the long-standing retention incentive program should be continued or modified.

According to a press release issued this week: “Acting on that authority and working with the compensation consultant, the board chair effected the final phase-out of the retention incentive program as of Dec. 31, 2010, moving the annual retention payment ($75,000 in the case of the chancellor and $50,000 in the case of the two other officers remaining in the plan) into the annual base salary.”

The press materials further stated: “In doing so, total compensation was not increased, since each participating officer had been receiving these payments, in recent years on an end-of-year basis, since the program was implemented in 2002.”

This week, the compensation committee increased the FY12 base salaries for the six officers other than the chancellor by between 2.3 and 4.6 percent, or an average for the six of 3.1 percent. Tritch, who chairs the compensation committee, said the trustees reluctantly agreed to the chancellor’s request that his salary not be increased.

“The [compensation] committee has accepted that request but has done so reluctantly, given the strong leadership that the chancellor has provided over the course of many years.”

At Nordenberg’s recommendation, trustees increased officers’ salaries for FY12 as follows:

• Patricia E. Beeson, senior vice chancellor and provost, 4.6 percent to $340,000.

• Jerome Cochran, executive vice chancellor and general counsel, 2.7 percent to $475,000;

• B. Jean Ferketish, secretary to the Board of Trustees and assistant chancellor, 2.7 percent to $208,000;

• Arthur S. Levine, senior vice chancellor for Health Sciences and dean of the School of Medicine, 2.3 percent to $762,000;

• Amy K. Marsh, chief investment officer and treasurer, 3.5 percent to $352,000, and

• Arthur G. Ramicone, chief financial officer, 2.7 percent to $344,000.

In making salary recommendations for the senior administrators, Nordenberg said, “The increases … are more than justified by the performance of these officers. They are compatible with the raises that have been awarded to others on campus, and the benchmarking that has been done by the committee’s independent consultant would support even larger increases.”

Regarding the two salary increases that are the largest in percentage terms, Nordenberg said, “One is the [4.6 percent] increase for Provost Beeson. It would be hard for me to imagine anyone having a better first year in that very demanding position than she had. As you know, her initial salary [of $325,000] was set appropriately for someone in her first year in that position; if we are not attentive to her increases, as she acquires experience and seniority, she will fall behind benchmark levels.”

He added that Marsh’s 3.5 percent increase reflected her role as leader of “the team that produced the highest fiscal year return on our endowment in our history, something that becomes increasingly important as public support for public higher education wanes.”

Officers’ raises will take effect Jan. 1, the trustees noted. That’s the same date that raises will be effective for any Pitt staff and faculty members earning more than $40,000. Those raises will not be retroactive to the July 1 beginning of the fiscal year. Raises for staff and faculty earning $40,000 or less were awarded in September and were retroactive to July.

Last July, the trustees executive committee, acting for the board, approved a fiscal year operating budget that included a 2 percent salary increase pool for faculty and staff.

In a July University Update, Nordenberg said the 2 percent salary pool increase was to be distributed as follows: 1.5 percent salary maintenance award for all non-union employees who have received at least a satisfactory performance review for the past year, and 0.5 percent to be allocated on the basis of merit, market and equity.

In addition to salary, Pitt senior officers receive benefits that include: an automobile for personal/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.

University Senate President Michael Pinsky said he had no comment about the salary increases. “The [press release] speaks for itself,” Pinsky said.

John Baker, chair of the Senate budget policies committee, noted that the 3.1 percent average increase for the senior officers is higher than this year’s 2.0 percent salary pool increase, but within the range of average raises given to faculty.

“Chancellor Nordenberg in particular should be commended for his FY11 efforts, as well as for turning down a compensation increase for FY12. He certainly earned his pay last year, and deserved the $75,000 increase in base salary he received in FY11 due to the phase-out of the retention incentive plan,” Baker said.

However, Baker continued, “I take issue with the board’s repeated assertions in recent years that the chancellor and other senior officers at Pitt are underpaid relative to their peers.”

According to the Feb. 21, 2011, issue of The Chronicle of Higher Education, Baker said, “The salaries of Pitt’s senior administrators are well above the median shown in the table for their job category and type of institution.”

SAC President Deborah Walker commented: “On behalf of the Staff Association Council, I would like to applaud the efforts of the University officers in leading Pitt through these challenging times. Chancellor Nordenberg is a trendsetter and he has consistently demonstrated that, by waiving his salary increase, he not only understands but he values the work and dedication of the entire University community.”

—Peter Hart

Filed under: Feature,Volume 44 Issue 8

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