Pitt Board Sets Officers’ Compensation

PITTSBURGH–The Compensation Committee of the University of Pittsburgh Board of Trustees met today to set the fiscal year 2012-13 salary for University Chancellor Mark A. Nordenberg and to review and approve salary recommendations made by Chancellor Nordenberg for six other University officers. Compensation decisions for all other University employees typically are made during late summer, after the University’s fiscal-year operating budget has been approved. However, by custom, the Compensation Committee defers its decision making until later in the year, so that more complete measures of institutional progress can be considered before officer salaries are approved.

In commenting on the past year, Board of Trustees Chair Stephen R. Tritch, who also chairs the Compensation Committee, stated, “The officers of the University faced a series of demanding tests during the past year. Fortunately for everyone who cares about Pitt, they met those tests with the uncompromising commitment and extraordinarily high levels of effectiveness that have become characteristic of Pitt’s officers. In the face of daunting challenges—from the extended series of highly disruptive bomb threats to new recommendations for a second successive year of deep cuts to state support—our officers led Pitt forward in ways that helped ensure that it could maintain its momentum, rising even higher in the ranks of this country’s very best research universities.”

Among the many forms of progress cited by the Compensation Committee were the following.

• Reflecting the overall attractiveness and stature of its educational programs, the University set yet another record for the number of applications for admission to the undergraduate programs of the Oakland campus. Perhaps even more telling, given the bomb-threat siege that disrupted campus life for much of the spring semester, the University’s freshman-to-sophomore retention rate was the highest in its history. Enrolled students continued to compete successfully for high national honors with the best students from the country’s finest colleges and universities.
• Individual members of the University’s faculty also received the very highest forms of academic recognition, and Pitt climbed into a “top five” position among all American universities in the National Science Foundation’s annual ranking of total federal science and engineering research and development support, almost all of which is attracted through highly competitive, peer-reviewed processes. The  universities in the NSF’s top 10, in rank order, were Johns Hopkins, Washington, Michigan, Penn, Pitt, Stanford, UC–San Diego, Columbia, North Carolina, and Wisconsin. In its 15-year climb from the 24th position to the fifth position on the NSF list, Pitt passed each of the following fine universities: Arizona, Colorado, Columbia, Cornell, Duke, Harvard, Minnesota, MIT, North Carolina, Penn State, Southern California, Stanford, UC-Berkeley, UCLA, UC-San Diego, Washington University in St. Louis, Wisconsin, and Yale.
• In the midst of the bomb-threat siege, the University hosted the site evaluation team for its reaccreditation examination by the Middle States Commission on Higher Education. The University not only was reaccredited without any conditions or qualifications, but the publicly issued report provided a testament to Pitt’s current levels of strength. It confirmed our position as a “world class research university,” noted our “unwavering commitment to excellence,” and stated that the team had witnessed in our community “an ethos of appreciation which evokes humility in those of us who come to observe it.”
• Despite an extended economic downturn that has presented real challenges for philanthropy, the University surpassed its $2 billion fundraising goal. The viability of the campaign had been questioned when it first was launched with a $500 million goal. However, building upon the hard work of both professionals and volunteers, with an institution increasingly worthy of investments in its programs and its people, and through the generosity of 182,000 donors, an amount four times the size of that initial goal was achieved. The funds raised in the campaign have made it possible for the University to initiate and strengthen a number of important current initiatives, while also adding to the long-term financial security of the institution through the growth of endowed funds.
• Pitt officers played a leadership role in structuring and implementing the University’s advocacy efforts—which also included alumni, faculty, friends, staff, students, and trustees—to resist a second wave of deep and disproportionate cuts to its state support, and they also were engaged in broader advocacy efforts on behalf of the public higher education community. As a result of these collective efforts, as well as a slight upturn in the state’s revenue receipts, the proposed cuts were not imposed. The Chancellor also played a key role in the work of the Governor’s Advisory Commission on Postsecondary Education. Its recently released report could provide a constructive framework for the future.
• During the past fiscal year, the University also received and accepted an offer to move its athletics program to the Atlantic Coast Conference. Though parting with the Big East Conference was bittersweet, because it had been a good home for Pitt sports for many years, the instability of its membership had been a recurring issue, and the Atlantic Coast Conference will provide new and special opportunities not only for athletics but for academic partnering and alumni outreach.

In commenting on the officer salary increases recommended by the Chancellor, Board Chair Tritch stated, “Clearly, many people have made significant contributions to the progress of Pitt. It is very clear, however, that the University has benefited greatly from the tireless efforts of a very talented leadership team. One of the most important aspects of the Board’s oversight and support responsibilities is to ensure that the officers of the University are appropriately compensated, remaining mindful of the academic culture, the metrics of the marketplace, and the financial circumstances that may exist at any particular point in time. It has been our practice to engage an outside firm to serve as an independent compensation consultant. Based on the benchmarking done by that professional consultant, the Compensation Committee continues to be concerned that our officer group lags behind appropriate benchmarks, particularly given the seniority of most of its members and the extraordinary record of accomplishment that the team has helped to create.”

In further discussing his recommendations, Chancellor Nordenberg noted, “One advantage of this delayed process of decision making is that we now know how salary increases actually were distributed across the University. For this fiscal year, even though the operating budget included a salary increase pool of 3.0 percent, the average faculty increase was 3.7 percent, and nearly 15 percent of the faculty received raises of 5 percent  or more, and nearly 5 percent of the faculty received increases of 10 percent or more.  Those numbers provide a framework for my own recommendations, with most officer raises clustered around 3.7 percent. The two exceptions are Chief Investment Officer and Treasurer Amy Marsh and Provost and Senior Vice Chancellor Patricia Beeson.  In the case of our Chief Investment Officer, who manages one of the country’s larger university endowments in addition to leading our treasury function and has gained national respect for the work she has done at Pitt, the fact that we had fallen behind our benchmarks took on a measure of unwelcome reality when she became the target of a very serious recruitment effort. The steps that we took to retain her, driven by her strong performance in serving the University for the past 13 years, resulted in a salary increase that remained within appropriate benchmark levels. In the case of Provost Beeson, we knew in setting her starting salary that it was low, reflecting the fact that she was new to the position. We also knew that we would need to raise that salary as she gained seniority, particularly if she was performing at high levels, which she has been doing. In fact, it would be hard to imagine anyone performing at a higher level than the level of Dr. Beeson’s performance during her first two-and-one-half years as Provost, which is a very demanding position.  Even with this increase, her salary will remain beneath the median salaries paid to her counterparts by the public AAU universities with which our consultant benchmarks.”

The officer salary increases recommended by the Chancellor and approved by the Compensation Committee are set forth in the following chart.

In commenting on the Chancellor’s salary increase, Board Chair Tritch said, “Despite the fact that he is in his 18th year of distinguished service as Chancellor, making him both one of the most senior, and one of the most successful major university leaders in the country, Chancellor Nordenberg continues to receive compensation significantly below the compensation paid to his peers, according to our consultant’s benchmarking and even according to reports in the general media. The existence of that gap is not reflective of a reluctance on the part of the Compensation Committee to raise the Chancellor’s compensation. Instead, it is the product of his resistance to any salary increases beyond those of a modest size. Last year, the Committee froze his salary at his request. This year, we were able to persuade him to accept an increase, as long as it did not exceed the lowest of the percentage increases to be awarded to any other officer. As a result, his salary will be increased by 3.3 percent.”

Each of the salary increases approved by the Compensation Committee today will be retroactive to the July 1, 2012, beginning of the current fiscal year. In other actions, the Compensation Committee authorized the Chancellor to approve future agreements between UPMC and the University that may involve additional compensation to the Senior Vice Chancellor for the Health Sciences for services provided by him in connection with UPMC’s international initiatives, provided that there is advance consultation with the Chair of the Board and timely notification to the Compensation Committee. The Committee also requested that the Chair of the Board undertake a periodic review of the executive benefits provided to senior officers of the University with appropriate professional help.

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