Gutmann, highest paid Ivy League president, will not take COVID-induced pay cut like peers

Unlike other Ivy League presidents, Penn President Amy Gutmann will not take a pay cut for this academic year, instead opting to take a pay freeze. 

In response to the financial downturn brought on by the COVID-19 pandemic, the presidents of four Ivy League schools — Harvard University, Dartmouth College, Brown University, and Cornell University — have taken pay cuts of 20% or more for this academic year. So too has the president of Stanford University, who voluntarily slashed his salary by 20% and encouraged the University’s senior leadership to take base pay reductions of five to 10%. 

But as Penn’s losses continue to mount, Gutmann will not follow suit, despite being the highest-paid president in the Ivy League with a salary of $3.6 million in 2017. Columbia President Lee Bollinger, the second-highest paid Ivy League president, is also not taking a salary cut this academic year.

University spokesperson Stephen MacCarthy did not respond to a request for comment.

Penn has enacted a slew of cost-cutting measures to offset pandemic losses, including a University-wide hiring freeze on all positions except grant-funded positions approved by the “highest level of the School/center,” restriction on overtime work, and elimination of mid-year salary adjustments. The University has also implemented a limited merit increase program which prevents employees with salaries above $70,000, which include officers, deans, and vice presidents, from an annual wage or stipend increases for the 2021 fiscal year.

Even with these measures in place, the University furloughed over 100 subcontracted dining workers this semester, leaving them without a steady income and forcing some to file for unemployment.

“While we truly wish that we could say with certainty that there will be no furloughs or layoffs, there is, unfortunately, too much about the future that we simply do not know,” Provost Wendell Pritchett and Executive Vice President Craig Carnaroli told Penn Today in June.

Wharton Yageo Professor of Accounting Wayne Guay said that were Gutmann to take a pay cut, it would be largely a symbolic gesture and have a minuscule impact on the University’s overall budget. 

“Symbolically cutting very senior administrators pay is understandable at some institutions, but I think the meat of the budget is certainly further down the line beyond the sort of the very top people’s compensation,” Guay said. 

Like Guay, Wharton EY Professor of Accounting Christopher Armstrong said while a pay cut would only represent a drop in the bucket of the University’s finances, it may help boost Penn’s image as an institution committed to social responsibility. Penn’s cost-cutting measures and layoffs come against the backdrop of Penn’s $14.9 billion endowment as of June 30, the sixth-largest endowment in the United States.

“I completely understand, it seems kind of counterintuitive we're sitting on this big pile of money, where people are getting laid off and certainly, the optics are bad. It doesn't seem right, doesn't look right,” Armstrong said. “It's not that easy.”

In line with the theme of social responsibility, Cornell University President Martha Pollack chose to take a 20% pay cut in part to better aid students and meet their needs, according to the Cornell Daily Sun. 

“Every dollar of these recaptured funds will be used to help meet the financial aid needs of our undergraduate, graduate or professional students,” Cornell Provost Michael Kotlikoff wrote in an email to Cornell students in March. 

Carnaroli and Vice President for Budget, Planning, and Analysis Trevor Lewis reported at the Faculty Senate Seminar Series this summer that Penn projected a $91 million budget deficit for fiscal year 2021, following $47 million in losses this past spring due to the COVID-19 pandemic. 

The School of Arts and Sciences also recently announced it will pause admissions for most school-funded Ph.D. programs for the 2021-2022 academic year as a result of the COVID-19 pandemic’s impact on the school’s finances. 

Gutmann has previously contributed to the University through donations, as seen in November 2008 when she and her husband donated $100,000 to support undergraduate research; though it is unclear whether the economic recession was the cause of said donation. Gutmann has not made a similar gift to the University this year in light of the COVID-19 pandemic.

Guay contrasted a presidential pay cut to a donation, adding that while a donation has a clear symbolic effect, a presidential pay cut may, in fact, convey mixed messages about the financial state of the University.

“What signal does [a pay cut] send? Does she want to send the signal that the University is really struggling? Does she want to send a signal that we're all in this together, so we're all taking a pay freeze, or does she want to send some signal that she's taking a bigger pay cut or a bigger adjustment to compensation than the faculty or the staff are?” Guay said. 

The trend of university presidents taking pay cuts largely mirrors the business world, where CEOs of major companies like Marriott, United Airlines, and Disney have slashed their salaries in response to the pandemic.

Armstrong pointed out that CEOs of large corporations get paid a significantly larger sum than Gutmann, who works in academia, allowing them more flexibility to take pay cuts.

Gutmann’s salary, which was 20 times the median Penn professor’s salary in 2016, has ignited debates among students and scholars over whether she is overcompensated. The Board of Trustees sets Gutmann’s compensation as well as the compensation for senior executives, Guay said.

Gutmann and senior leadership, including deans, vice presidents, and senior officers, had previously agreed to a pay freeze in December 2008 in response to the economic recession. Armstrong said, however, the 2008 recession was a far cry from the obstacles that university presidents must navigate today.

"Back then, it was just a more of a traditional financial recession whereas now, people are trying to figure out, is this going to disrupt face-to-face learning? There's just so much more uncertainty," Armstrong said.