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Executives’ salaries rise

Claire Heininger | Monday, December 8, 2003

Despite a nationwide trend of escalating salaries for university presidents and executives that has University of Michigan president Mary Sue Coleman and several others pushing the $1 million mark, rates for comparable Notre Dame officials remained relatively low in 2001-02.According to a Chronicle of Higher Education report released Nov. 14, University President Father Edward Malloy’s salary grew from $315,000 in 2001 to $362,860 in 2002 – an increase of almost $48,000. However, these statistics are somewhat misleading, as the vast majority of Malloy’s annual earnings are given to the Congregation of the Holy Cross. “He lives on a modest stipend … [but] Notre Dame does choose, interestingly, to list his salary,” University spokesman Matt Storin said. “A few Catholic universities list zero for their presidents, and of course that’s [Malloy]’s net [income]. But we do feel that it’s good business practice to report payment for services rendered.”Storin added that a compensation committee that reevaluates payment issues for Malloy and others on a regular basis determined the $48,000 increase.”The trustees do decide on routine increases,” Storin said. “But [Malloy] doesn’t keep it.”On a national level, even Malloy’s reported salary ranks far below that of some of his private university peers. Led by Shirley Ann Jackson, president of Rensselaer Polytechnic Institute, four private-institution presidents earned over $800,000 in 2001-2002, three of who topped $1 million with additional corporate pay. Increased competition among universities to lure a small number of qualified candidates, the changing responsibilities of the presidential lifestyle and trustees who fear losing potential presidents to the private sector have all been cited as factors contributing to the boom in executive compensation, which persists despite the current economic recession.Public university presidents are increasingly keeping pace, with Coleman, who is slated to make $677,500 in 2003-04, topping the list. Eleven other public presidents earned more than $500,000 in 2001-02, in many cases stretching tax dollars that had previously been used for academic programs and raises for faculty and staff members. Tuition increases have also been used to keep up with the executive compensation contest, resulting in backlash among many students and parents. Compared to these hikes, Notre Dame’s executive compensation increases in 2001-02 were fairly minor, although they did represent an exceptional year for the University’s endowment, which “had a huge increase during that period,” Storin said.Notre Dame Chief Investment Officer Scott Malpass saw the benefits of that increase, collecting a total of $757,992 in 2002, up from $408,800 in 2001. While this jump was substantial, Storin pointed out that Malpass’ contract indicated that certain incentives and delayed performance bonuses should be paid during the 2002 fiscal year. He also noted that other universities have taken the further step of creating separate corporations to manage their endowment – and paying the leaders of these corporations like private executives, a move that has resulted in controversy on the Harvard campus.”Harvard has a private company,” Storin said. “Malpass could make much more in the private sector … what you have here is a much more modest version.”The senior vice president of Harvard Management Company, David Mittelman, earned $17.5 million in 2001-02, causing students and alumni to question the University’s priorities. While the company is a non-profit organization, many affiliated with the university deemed its climbing executive compensation inappropriate at a time of campus-wide cost cutting.Unlike at Harvard, Notre Dame’s endowment is managed within the University, but its fluctuations similarly impact yearly salary increases.Although average yearly increases for University staff are in the “area of 4 percent,” Storin said, “they were less this past year” because of endowment concerns. The delay in the Chronicle of Higher Education’s report also contributed to uncertainty in evaluating executive compensation on a yearly basis, he said.Storin pointed to University provost Nathan Hatch as an example of the radical changes can that occur from one year to the next. The Chronicle reported Hatch’s 2001-02 compensation as $411,507. However, that number included a significant amount of deferred compensation that Hatch opted to receive in that particular year, Storin said. “We’ll just have to see next year’s figures,” he said. “That figure in no way represents his annual salary.”