On Nov. 14, The Chronicle of Higher Education released its annual compensation report for the chief executives of 448 colleges and universities across the U.S., reporting on tax data from the calendar year 2008. According to the report, President of the College Ronald D. Liebowitz’s total compensation for 2008 amounted to $729,929.
The Chronicle report represents a dramatic change in how the U.S. Internal Revenue Service instructed private colleges to disclose compensation data for the 2008 reporting period. The new tax form, which is far more comprehensive than its predecessors, required colleges to report data from the 2008 calendar year, rather than the fiscal year ending in June. This change created overlap between the data reported this year and that reported last year for the 2007-2008 fiscal year.
These 2008 compensation packages also reflect salaries set before the recession. The Chronicle reported a base pay for Liebowitz of $286,433; however, after 2008, in light of the economic climate, Liebowitz volunteered salary reductions totaling 10 percent along with, according to the Board of Trustees’ Compensation Committee chair Frederick Fritz ’68, several other compensation package reductions that have not been made public.
As a result of these reductions, Fritz wrote in a memo, “[Liebowitz’s] 2009 and 2010 compensation were significantly less than 2008, and will be reported as such in the Chronicle’s reports next year and the year after.”
“I think the Chronicle this year — it does this often — is trying to present more and more of the full picture,” said Liebowitz. “The difficult aspect of that is that it’s never apples to apples. Each year … it presents newer and more inclusive information, but for the sake of understanding one year to the next it makes it more challenging.”
The figure for total compensation reached by the Chronicle represents a composite of various types of cash and non-cash compensation Liebowitz receives that is divisable into three categories: salary, benefits and a presidential compensation package. Among comparator schools — a group of 24 peer institutions used by the Compensation Committee to assess the package it offers — Liebowitz’s salary, with the accepted reductions, is lowest.
Liebowitz also noted that his “generous” benefits, like health insurance, disability and retirement contributions, are something he has in common with all employees of the College.
“The College has a generous benefits package compared to other colleges and universities, and that’s across the board, not just for presidents,” he said.
A large part of the third category, the presidential compensation package, is rent-free housing; Fritz described residence at the 3 South St. as “a Board-imposed requirement for the president at Middlebury.”
Liebowitz explained what the decision meant for his family.
“Truth be told, I was the second or third president to ask that that not be a benefit,” he said. “We asked to retain our house in Cornwall … but the board has had presidents living at 3 South Street since 1917, so we do that and we get charged for that of course as a benefit, and then everything else that goes into supporting that house.”
Like Liebowitz’s salary, the amount spent on household support has decreased since 2008 due to the recession, but it will always play a part in the president’s compensation as Liebowitz and his wife, Jessica, host many events at their house. The cost of the house, along with household support and travel expenses, are all components of the President’s pay that the Compensation Committee “deem[s] necessary to accomplish the job,” said Fritz.
A final factor in the compensation package reported by the Chronicle is known as deferred compensation. Deferred compensation can take many forms, including bonuses, severance pay or supplemental retirement pay, and has become a common feature of compensation packages for the chief executives of U.S. colleges over the last few years. The Chronicle reported Liebowitz’s deferred compensation as amounting to $169,404 for 2008.
The Board included deferred compensation “as an important tool in its 2003 presidential search process to recruit and, more importantly, retain Middlebury’s president,” said Fritz. One way in which Middlebury’s offer differs from that of many institutions is that it is subject to 100 percent forfeiture.
“It only becomes my benefit upon certain conditions, one of them of course is if I fulfill my obligations to the job, secondly if I serve a specific amount of time,” said Liebowitz. “If I meet those criteria, then it becomes mine.”
Liebowitz, who is also a tenured member of the Geography department, explained the personal significance of deferred compensation for his career plans and for other presidents receiving such a benefit.
“For me, deferred compensation has always been tied to my next career,” he said. “My own personal belief has always been that once one finishes a presidency, one moves on and gives up the tenured position. … I think that’s what it’s for, and I think the Board has been very aware of that and so it sets aside a certain amount of money so I can take the time at the end of my presidency to move into another career.”
The Compensation Committee undergoes a thorough process of external review to determine whether the compensation package it offers Liebowitz each year is appropriate. Each year, it considers external compensation data, the relative size of the College’s budget compared to peer institutions, the operations of the College’s international campuses and affiliate schools and, crucially, the president’s performance against a set of predetermined goals as inputs into any decision-making. The Committee further relies on the legal opinion of a third party “industry expert, opining that our overall package is well within market norms,” Fritz said.
Fritz supported his Committee’s compensation decision on the basis of Liebowitz’s performance as President.
“Middlebury has a first-class president who earns fair compensation for his outstanding performance,” he said.
Chronicle reports high presidential compensation for 2008
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