University President Judith Rodin has topped the charts as the highest paid university president in the country, according to figures released this week by The Chronicle of Higher Education.
Rodin received a total compensation package of more than $800,000 for Fiscal Year 2001, including a combined base salary and performance bonus of $690,405 and $117,616 in benefits. Those numbers represent more than a 15 percent increase over her FY 2000 compensation.
In addition to what she was paid by the University, Rodin also received about $196,600 in combined annual compensation for serving on the boards of Aetna, Inc., BlackRock Funds and Electronic Data Systems Corporation and $52,000 in deferred compensation in the form of stocks from AMR Corporation, The Chronicle report said.
Overall, salary figures for college and university presidents saw a significant increase in FY 2001. Twenty-seven private college presidents received compensations of more than half a million dollars, which is more than double the number in the previous year.
Following Rodin as the second and third highest-paid doctoral/research university president were former Princeton President Harold Shapiro, who received $705,683 for FY 2001, and Johns Hopkins President William Brody, who received $677,564.
Also among the top earners were former New York University President L. Jay Oliva, Drexel University's Constantine Papadakis, Yale's Richard Levin and the University of Southern California's Steven Sample.
According to The Chronicle, although former Connecticut College President Claire Gaudiani earned a total compensation package of almost $900,000 for FY 2001, this included severance pay that she did not actually receive in 2001, bringing Rodin to the top of the list in terms of annual earnings.
While presidential salaries were up across the board, Rodin's dwarfed many of her Ivy League peers. According to University Board of Trustees Chairman James Riepe, the gap between Rodin's salary and that of other college presidents represents a number of factors.
"The main issue is about the complexity and scale of the institution and what, in her case, she has achieved as president over her long tenure," Riepe said. "I think the scale -- if you look at the number two of the ongoing presidents -- the scale, the complexity of the University, and [everything] being on one campus and what she has achieved during her time at Penn justifies what we believe is reasonable compensation."
"Each school sort of develops its own practices and that influences, I'm sure, how people pay," Riepe added. "Penn has adopted a governance process that we think is sort of a best practices governance process."
This evaluation process, Riepe said, is based on the one used in the corporate sector. It includes establishing a separate compensation committee of Trustees who rely in part on outside consultants for advice. The committee also uses a specific set of performance criteria and assesses whether or not administrators have reached certain goals they set out for themselves. This represents what Riepe described as "an evolving change over the last decade."
In Rodin's case, the Trustees take into consideration not only her achievements over the past year, but also what she has done during her eight-year tenure as president. This includes supervision of an extensive fundraising campaign and implementing the University's first successful strategic plan, Riepe said.
He added that other factors -- like some universities' failure to routinely report benefits as part of presidential salaries -- may also contribute to the difference between Rodin's salary and those of other presidents.
"They may not disclose elements, whereas we disclose everything that Dr. Rodin gets," Riepe said, noting that this can offset total compensation figures.
But Rodin is not the only college president whose salary has climbed in recent years. Throughout higher education, administrators have seen huge increases in both base compensation and benefits packages.
In FY 2000, Rodin's $698,000 total compensation placed her second among presidents of doctoral/research universities and fourth overall. She trailed former University of Bridgeport President Richard Rubenstein, who earned $832,492 in FY 2000. Overall, she was the fourth highest paid president of any type of college or university.
"This trend has been upward for a few reasons," said Raymond Cotton, vice president for higher education at ML Strategies, a Washington-based consulting firm. "There are 3,500 institutions of higher learning in this country and at any one time 10 percent are searching for a" chief executive officer.
In this competitive market for a leader, the fact that Penn has kept Rodin coming back for the last eight years is a success, Cotton said.
"I think your university is very fortunate," Cotton said. "From an objective point of view, [Rodin] seems to be doing a very good job, but there are too few schools where that is the case... The University ought to pay what it takes to get the best talent, and the market is saying that it takes more to get the best."
Whether or not this competitive trend will continue is hard to predict, though.
"I won't say that it's a constant trend -- you definitely get spikes -- but I would say that in the last 10 years, a number of ceilings have been hit," Cotton added. "There's going to be a huge turnover in the next few years and there is going to be a scramble for talent."
Riepe said that despite recent rises and the corporate-like approach some universities are taking to compensation, salary levels in higher education are still nothing like those in the private sector.
"I think these presidents -- the very most successful presidents -- are still paid well below what they could earn in the private sector, but they've elected to be in the academy," Riepe said. "I don't think the compensation will ever get to corporate levels, and I don't think it should."
Cotton agreed, noting that "the average CEO of a corporation makes about 500 times what the average employee of that organization makes."
"That ratio comes nowhere near that in the not-for-profit sector," Cotton said. "If you compare [Rodin's] compensation with that of a CEO of a corporation of comparable size, she's way underpaid. In the not-for-profit sector people take these kinds of jobs for things other than salary, but [if Rodin was working in the private sector her salary] would be well into the seven figures, with stock options."
