A new report in The Chronicle of Higher Education shows that President Emeritus John M. McCardell, Jr., was one of a handful of presidents paid more than $1 million by their institution in 2003-04. It also revealed that during the rest of his presidency, McCardell was making merely a fraction of that total.
According to information available on the journal's Web site, then-President McCardell's salary itself never reached $300,000, though during the penultimate year of his presidency he made almost $350,000, including benefits. However, as was the case with several other presidents listed as top earners by The Chronicle, his retirement benefits were nearly triple his annual salary, bringing his total compensation last year to $1,213,141. An article in The New York Times based on The Chronicle's report did not consider compensation for retirement benefits.
A president's compensation normally consists of a salary, pension, medical benefits and use of a house and a car, and this was the case for President McCardell. President Ronald D. Liebowitz's compensation does not include a car.
The salary is the result of negotiations between the Board of Trustees and the President, according to Executive Vice President and Treasurer Bob Huth. The compensation committee - which consists of the Chair of the Board, the two vice-chairs and a member of the prudential executive committee - collaborated closely with PricewaterhouseCoopers, an expert in the field, to create a deferred compensation plan that did not exceed fair market value for the services that McCardell provided.
Unlike American University, whose lavish severance package for outgoing president Benjamin Ladner prompted the resignation of several uniformed board members, Middlebury's entire Board of Trustees knew and approved of this package.
In an e-mail from the Public Affairs Office, Board Chair Rick Fritz '68 stated, "The Board brought a combination of academic and business experience to this decision, and felt this was a justified award for exemplary service during John McCardell's 13 years as president."
The article also showed what appeared to be a disturbing trend: a recent increase of millionaire presidents. Many of those interviewed for the report called for salary caps in light of what they claim reflects the deplorable excesses in the upper echelons of corporate America. Huth, on the other hand, believes that a particular law - the 2002 Sarbanes-Oxley Act - is in part responsible for propagating the very excesses it purports to restrain.
The act, promulgated after the scandals of Enron et al., created a more rigorous environment for corporate responsibility. Many higher education officials - including those at Middlebury - voluntarily adopted these standards in the interests of best practice. Before Sarbanes-Oxley, a president only needed to report deferred compensation upon receipt, which could be spread over several years. Now, he must report the total amount when it is first available to him, then again when he receives the money. Thus, had McCardell and his fellow retiring presidents deferred their compensation rather than accept a lump sum, they would have the amounts reported twice over on funds they had received just once.
This law alone does not account for the overall trend of increasing presidential salaries. Other factors cited have been a desire to hire presidents who have experience elsewhere, the pressure to find new presidents of comparable ability to long-serving but recently retired presidents, and increasing competition from the private sector and other institutions. Huth stressed the importance of a good president for capital campaigns, and stated that McCardell's ability to increase both the size and quality of the student body is virtually unheard of, as the two factors are typically divergent.
McCardell also brought in about $140 million for the New Library and Bicentennial Hall alone. Furthermore, he and his wife Bonnie have been significant contributors to the Middlebury community at large, shown especially through his activity in the United Way. A fairly modest retirement package of under $1 million is therefore within reason, said Huth. "I don't see this as anything out of the ordinary," he stated.
Still, the College wasted no time in preparing itself for calls from concerned donors, composing a list of talking points highlighting the fact that during his long tenure here, McCardell's compensation never approached that of his last year. The retirement package is pittance compared to what someone in the corporate world would have made with such a performance.
Indeed, for much of his presidency, McCardell earned less than fellow presidents at peer institutions. McCardell's compensation varied from year to year, as is typical for a president, dipping to a low of only $238,152 in 1998-1999 and reaching a high of $365, 676 during his final year, excluding retirement benefits.
McCardell explained that yearly fluctuations in compensation depended on a number of factors, including changing laws, differing family circumstances and the amount of charitable contributions his family gave to the College in a particular year. He stressed that his salary was not incentive-based, and that he had a remarkably amicable relationship with the Board of Trustees. "Ours was never a relationship of negotiation and bargain-making," McCardell insisted.
When asked why he stayed at Middlebury when he could have potentially made more money elsewhere, McCardell said he doubted that he could have achieved the same success at another college. "I feel an immense loyalty to this institution … and I do not feel these skills are necessarily portable. Not every institution is the same."
He also stated that the average tenure of a college president is now five years, and that one-third have been in office for less than three, making his long tenure a fortuitous anomaly.
President Liebowitz's salary will not be reported until this time next year, though Huth stated that it was commensurate with the fair market value of a president contracted after a national search.
Written by JASON F. SIEGEL
