Robert Hsu | In defense of Amy

The Casual Observer | Amy Gutmann has proven that she deserves her salary

· January 18, 2013, 1:40 am

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Robert Hsu
The Casual Observer

$1.5 million.

That’s enough to give almost everyone in the city of Philadelphia a buck. That’s enough to cover 25 students’ tuition at Penn for a year. That’s also enough to keep Amy Gutmann at Penn for 2013.

In 2010, Gutmann was paid $1,462,742, making her the 12th highest-paid president at a private university. There has been a wide range of reactions to her salary, with many students expressing their discontent.

“In general, I feel that people who disapprove of Gutmann’s salary, including myself, feel that it may be too high when you compare it to the high cost of coming here, the quality of education that we’re getting and the disparity between what students expect out of Penn and actually receive,” Wharton sophomore Idy Akpan said.

“The level of support and services that one would expect for paying $60,000 doesn’t seem to come across, so a $1.5 million salary doesn’t feel completely justified … I feel like emotionally and psychologically, the experience doesn’t all add up.”

Although Gutmann is comfortably in the one percent, she deserves a break. When evaluating her salary, we should look at the context and base our judgments on her value.

First of all, there is basic supply and demand. There is a market out there for executives, administrators and managers. Every institution and company competes to attract the brightest and best.

In order to have the most qualified president, we have to be willing to offer an enticing salary that keeps her at Penn. This attitude is also the reason Penn is able to attract the best professors, who have already established reputations that could secure them more lucrative career paths outside academia.

Second, Penn has approximately 17,000 employees in addition to around 20,000 undergraduates and graduates. For heading an institution of Penn’s size, Gutmann is paid relatively little.

To put this in context, CEO Kevin Sharer of Amgen, a biotechnology company with roughly the same number of employees, earned approximately $19 million in 2011, more than ten-fold Gutmann’s 2010 salary. I doubt Gutmann would want to lead a company like Amgen, but she definitely has many more options out there that she could easily take.

A common complaint among some students is that there’s too large of a discrepancy between Gutmann’s salary and that of 17,000 employees, but we must recognize the unique demands of her position.

Gutmann faces immense pressure every day as the figurehead and leader of our university. Every single success and failure of the university is reflected on her and she represents our university on both a national and international scale. Handling all of this definitely takes a lot of skills and experience, which corresponds with her salary.

And seeing what she’s actually accomplished at Penn further justifies that $1.5 million. Even in a decade of economic volatility, Gutmann was able to implement a no-loan financial aid policy for undergraduates.

Moreover, she successfully completed a phenomenal $3.5 billion fundraising campaign that will continue to improve Penn. That’s approximately the same size as Dartmouth’s endowment. As president, she has more than exceeded her role to fundraise — arguably her primary job — and has set the standard for all universities.

Finally, under her watch, our campus has continued to grow. Not only do we have new research facilities and green spaces such as Shoemaker Green, but with Penn Park we finally reached the west bank of the Schuykill.

Perhaps the solution to students’ complaints about Gutmann’s salary doesn’t have to involve reducing or capping it.

Akpan had a couple ideas. “I’m sure Penn releases a document that shows where tuition goes, kind of like how every company has financial statements,” she said. “Penn should publicize this kind of information more because people would feel better knowing that their money is going to good sources. Transparency and communication are crucial.”

That might help relieve some of the tension over people like Akpan’s general qualms. But the great thing about Gutmann is that her salary and her work are very transparent.

It’s easy to look at $1.5 million as an absolute number instead of in context. But with all things considered, Gutmann might actually be underpaid.

Robert Hsu, a College and Wharton sophomore from Novi, Mich. His email address is rohsu@sas.upenn.edu. Follow him @mrroberthsu. “The Casual Observer” appears every other Friday.

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