Committee reviews executive pay

The committee will make its recommendation to the board in June.

by Dina Elrashidy

A Board of Regents committee met Thursday for the first of a series of meetings reviewing executive compensation and administrative leave packages at the University of Minnesota.

The meeting emphasized the struggle between staying competitive and keeping budgets reasonable.

“This is an industry that’s short of administrators,” committee Chair Regent Richard Beeson said “The pressures that these jobs bring … are such that it’s a challenge to recruit and retain people for these positions for any length of time.

“We don’t want to overburden the process. We don’t want to necessarily take discretion away from the president.”

The media’s focus on University compensation packages partially prompted the review, board Chair Linda Cohen previously told the Minnesota Daily.

The Star Tribune reported that former University President Bob Bruininks signed compensation agreements worth more than $2.8 million. Although some departing administrators didn’t plan on returning to the University, they were still paid at their executive salaries while on leave.

“We can’t do much if [anything] at all about the past … But we can learn from the past,” Regent Dean Johnson said.

The review committee will have a recommendation on any policy for the full board by its June 8 meeting.

Johnson put the packages in the context of student debt after graduation.

“The question before us is: What is fair compensation and severance in view of who is paying the bill? It’s taxpayers; it is students,” Johnson said.

Transitions and severance packages

Under the current definition in board policies, the University has 18 executives, Vice President for Human Resources Kathy Brown said. It also has 23 deans. However, she said that the regents might want to decide whether deans should stay in the executive administrative category since they report to the provost and not the president.

The president prepares an initial appointment letter, including base compensation and benefits, which has to be approved by the board.

Individual salary increases don’t come to the board, but they are included in an overall number in the annual budget presented to the board, Brown said.

A main point of contention at the meeting Thursday was over transitional leave packages for tenured faculty.

The purpose of transitional leave money is to “re-tool” administrators for returning to faculty work, Brown said.

When faculty members leave their role for an administrative position, the faculty salary is tracked — if administrators return to their faculty role, an increased salary that reflects what it would’ve been had they stayed in their position awaits them.

Brown said transitional leave packages are needed so that faculty members aren’t penalized for switching to an administrative position. She said this is common practice in higher education.

Board members discussed this financial security extensively.

“Here’s the problem I see with that … you can go back to that job and gain some of the benefits even though you weren’t there. Why should you be given that economic protection here?” Johnson said.

Regent John Frobenius said that this policy is the most difficult for the public to understand because other industries don’t give that kind of job security.

“If education is the only place in the world doing it, we got to really be able to justify why we’re doing it,” Frobenius said.

The board also discussed the issue of severance packages, which it doesn’t review because they aren’t usually included in the approved appointment letter for executives.

Nontenured faculty executives could have up to a six-month severance payment, Brown said. The payout would be determined by the president.

This is different from other staff members that have notice periods based on length of service. Since these executives can be dismissed at any time by the president — such as during a presidential transition — their severance pay has fewer guidelines.

However, it does have a limitation of not exceeding six months’ salary and retirement and up to 18 months of health care benefits.

Brown said the policy is put in place for presidential transitions.

Frobenius said severance packages are normal across industries and that he’s more troubled by the transitional agreements.

When administrators decide to leave the University for any reason, current policies leave the board power to make decisions on severance packages. However, those generally haven’t gone to the board for formal action, but regents sometimes give their advice on how large those packages should be, Brown said.

Frobenius said the board had to keep in mind that some administrators have previously left with gentle nudging from presidents through severance packages, which makes it an important tool for presidents.