When Amy Gutmann takes office as University president in July, her pay will likely begin above the $500,000 mark -- and continue to climb.
Half-million-dollar presidents are becoming increasingly common, and Gutmann will likely join this club. Her large pay package must reflect the relative complexity of Penn, with its extensive health system, 12 schools and large undergraduate population. The University is also the largest private employer in Philadelphia and has a $3.59 billion annual budget and with great complexity comes high pay.
University Vice President for Human Resources John Heuer cited "the size and scope of the organization" as a key factor in determining pay. Since Penn is a large employer and a prestigious school, Gutmann will be compensated accordingly.
"We have a compensation consultant who works with the [University Board of] Trustees," Trustees Chairman James Riepe said, noting that current presidential salaries at other institutions serve as a barometer for Gutmann's possible pay. "They have information and data on what presidents are paid and what provosts are paid, and we use that data to have context for" Gutmann's salary.
Current University President Judith Rodin made a combined $845,474 in salary and benefits during fiscal year 2002, placing her near the upper limits of salaries for university presidents a position which she has been familiar with for some years now.
However, Rodin started at a significantly lower rate, earning $375,980 during her first year as Penn's president. From there, Rodin's salary began the steady increase that would land her close to the million-dollar mark.
Rodin's first-year salary marked a significant decrease from that of her predecessor. Sheldon Hackney's salary and benefits package during his final year as University president totaled $676,574. Gutmann's salary is likely to follow a similar trend.
According to Heuer, salaries like Rodin's are geared toward performance. So as Penn's U.S. News and World Report ranking climbed, so did Rodin's salary.
"With any employment situation, it seems logical that ... somebody who's been in the job for a while [performs better] than when they came into the job," Heuer said, making a salary "greater when somebody exits than when they first came on board."
According to Riepe, Gutmann's performance evaluation will begin the moment she steps into office and proclaims her goals for the forthcoming year.
Gutmann "will have a portion of her compensation ... oriented towards how she does in accomplishing her goals," Riepe said. "She'll set out goals in the beginning of the year for the University, and then personal goals as well, and that's what we look at at year end."
For this reason, Gutmann's salary cannot start at a level comparable with Rodin's. Though championed by trustees as the result of an exhaustive search, Gutmann has not yet had the opportunity to prove herself in the office of the Penn presidency. Her salary must leave room for growth in order to provide incentive for performance which means she will likely be starting in the $500,000-$600,000 range, close to three-quarters of Rodin's salary last year.
The recent transition at Princeton University reflects a similar scheme, with former President Harold Shapiro earning $705,683 in fiscal year 2001, his last year in office. Current President Shirley Tilghman received $486,667 in salary and benefits during her first year.
A lower limit on Gutmann's salary is set by her most recent reported earnings as Princeton's provost: $373,603 for 2002's fiscal year. According to figures from the Yale Daily News, Rodin's pay increased by about $100,000 when she ended her tenure as Yale's provost to become Penn's president.
