Wall St. executives are apparently in for their best pay day in history, despite the fact that the collapse of the credit markets and the beginning of one of the worst recessions in US history are barely a year old. Goldman Sachs (NYSE:GS) posted record profits for its fiscal year and it is anticipated that a number of partners there will make tens of millions of dollars. Outside analysts expect the Goldman comp poll will be about $22 billion which is over $700,00o for each person at the investment bank.
The huge Wall St. pay packages may push Congress to attempt to limit financial executive pay. The Treasury has already appointed a pay czar to limited compensation among senior management at financial firms which have not paid back TARP funds. The Fed may begin to offer guidance to companies that it regulates, in part to cut down risky behavior that sometimes results in short-term profits.
Many public companies have cut top management pay has profits have been undermined by the recession. Many chief executives will also lose a big portion of their compensations because the value of their stock options has been destroyed by the falling market.
One place that pay limits do not seem to have reached is universities. A new study by the Chronicle of Higher Education shows that 23 college presidents made over $1 million in the 2007-2008 fiscal year. Based on data released by Harvard, Yale, and other elite universities, these extravagant payments were made during the same period that many educational institutions lost a large part of their endowments in the stock market meltdown.
Most people would expect the presidents of elite universities to be paid well. And, many of them were. The head of Yale, which is often rated as one of the top three universities in the US and has the second largest endowment did remarkably well. Richard Levine made $1.179 million at a time when the university he runs was facing cut backs due to a 30% drop in the institution’s funds to about $16 billion.
Another Ivy League president who did remarkably well is Lee Bollinger of Columbia who made $1.38 million. Bollinger at least has a resume to back up his pay package. He has been provost at Dartmouth and the president of the University of Michigan. The people in Ann Arbor must have been too cheap to keep him there.
Rounding out the Ivy League is Amy Gutmann at the University of Pennsylvania. She graduated from Harvard, which probably helps. Beyond that, she does not have much to recommend her. Gutmann was a political science professor for most of her career.
The head of New York University, John Sexton, made $1.297 million last year. He has some defense for his compensation. NYU is the largest private university in the US and employees 16,000 people. Sexton could also make the case the New York City has a high cost of living, but that is not likely to get him much sympathy.
Perhaps the most amazing thing about the list of college and university president who made over $1 million is how many of them run second and even third tier schools. The head of Rensselaer Polytechnic Institute made more money than anyone on the list. Shirley Ann Jackson took home $1.598 million. She runs a fairly well-regarded engineering school, but it is hardly MIT.
Three of the highest paid presidents, including Jackson, run obscure institutions. Steadman Upham is the head of the University of Tulsa. Prior to his current job he was CEO of Claremont Graduate University, an unlikely origin for a millionaire. Steadman made $1,485 million last year.
The last hardly known college president to do well is Donald V. DeRosa who recently retired as president of University of Pacific. He made $1.351 million last year. That probably made him too expensive for the little university to keep.
The list also includes several people who retired from university presidencies before 2008. On the honor roll are Stephen Trachtenberg of George Washington University who got a $3.66 million package, Nancy Dye the former Oberlin College president who was paid $1.46 million, Richard S. Meyers formerly of Webster University who got $.43 million, and, Robert Bottoms of DePauw University who was paid $1.296 million.
All that talk about teachers being poorly paid is just nonsense.
Douglas A. McIntyre
Executive Producer: Philip MacDonald