Last May, Josh Moody reported for Inside Higher Education on the contract for the University of Florida’s interim president, Donald Landry. Cutting to the chase, Dr. Landry was to be paid a base salary of $2 million for his one year term, plus a bonus of up to $500,000 for achieving certain goals, defined in his employment agreement, which is available here. Some of these goals (a strategic plan for the University, a strategic plan for the University’s Board of Governors) make it sound like Dr. Landry was to get an extra $500,000 for doing his job. Others (“Other priorities established by the Board [of Trustees] or the Board of Governors”) make it seem like he would paid a bonus if the Board of Trustees or the Board of Governors felt like paying him a bonus. On top of that, he also received a $2 million “exit package,” bringing the total compensation up to $4.5 million.
Florida law provides that the University’s president be paid no more than $200,000 out of public funds, so in addition to raising money for the University’s athletics team, I guess the advancement people have to raise money to pay for the president. Mind you, $200,000 is too low for this position, so that statute needs updating, but $500,000, not $2 million, seems right. The job comes with benefits, housing, a staff, and a generous budget. $500,000 is plenty. You won’t starve, and you won’t be paid less than, say, a law professor with an endowed chair. In case you’re wondering, the head football coach at the University has a six year, $44.7 million contract, and Sports Illustrated reports that the rest of the football coaching staff will earn $11.2 million this year. I don’t know if state law caps that. Those salaries are also nuts, but at least they come from boosters and revenues generated through ticket sales and broadcast and licensing contracts.
If coaches are going to pull in those kinds of salaries, I suppose it makes sense that university presidents should at least rate assistant coach salaries. Still, from my perspective as a lowly faculty member, and with the academic portions of universities (i.e., their undisputed raison d’être) facing existential threats from the twin specter of an enrollment cliff and a war with the federal government, these numbers are all crazy. At least there are metrics to determine whether a football coach is successful. I don’t know how you measure the success of a university president, and I suspect that the salaries for these folks, like the salaries for corporate executives, is just based on the salaries for other similarly-situated university leaders.
Early in my career as a legal academic, I argued that there is a structural conflict of interest at the heart of executive compensation schemes. Boards of Directors are asked to approve of executive compensation packages. Boards of Directors, even if not captured, consist of people who serve or served in similar executive positions. They, like every normal person, tend to place too high a value on their own worth, but if you asked a bunch of law professors to set their own salaries, they might double or triple their takes. Executive compensation is off by an order of magnitude or more, and the incentive structure can be way off. My work focused on Disney’s deal with Michael Ovitz, which paid him more handsomely for failure than he would have made had he succeeded.
But returning to Florida’s interim president, I don’t know anything about his performance, but it is hard to see how paying him a $2 million “exit package” is not waste. He’s done his job. He was compensated for it. If he performed admirably, he earned a bonus sufficient to cover the annual salaries and benefits of three or four professors in the humanities. I could find no reference in Dr. Landry’s contract to an exit package, so it seems that the Board decided to reward him for a job well done. Well, that would be fine if they were paying him with their own money. They are fiduciaries, so the question is, would they give Dr. Landry a $2 million gift if it were their own money? Florida pays its university president twice the going rate for university presidents at SEC schools. So this salary can’t even be justified as being what the market for university presidents demands. Dr. Landry made four times the going rate to serve as an interim president.
According to Inside Higher Education, Florida Senator Rick Scott has chimed in:
Frankly, what is occurring at UF sounds like something we would see coming out of states like California and New York, not the free state of Florida. . . . Any dollar UF has should go toward helping its students get good paying jobs. Finally, this concept in higher education that there is a difference between a donation dollar, a tax dollar, or a dollar received from tuition is insane. Every single dollar under UF controls [sic] should benefit UF students to help them get high paying jobs upon graduation, full stop.
Hear, hear! Well, sort of. University education is not the same as vocational training. Still, a B- is a respectable grade these days for a politician speaking on the purpose of universities.
Dr. Landry’s successor, Dr. Stuart Bell’s annual salary is reported to be $2.4 million. I can’t find any comments from Senator Scott since a series of hot-tempered exchanges in May.
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