Asking for Less

The next president of the University of Texas at Austin declined a $1 million base salary and instead opted for $750,000. Faculty members say it's because "he gets it."

May 14, 2015
 
UT-Austin
Gregory Fenves

Gregory Fenves was quite clear when he was offered seven figures to become the next president of the University of Texas at Austin: “$1 million is too high for a public university.”

That’s probably not the message his peers at Texas A&M University and the University of Houston want to hear, but Fenves thought it was one that would resonate with the Legislature and faculty members.

“It will attract widespread negative attention from students and faculty given the difficult budget constraints of the past five years,” he wrote about the initial $1 million offer. “With many issues and concerns about administrative costs, affordability and tuition, such a salary will affect the ability of the president to work with the Texas Legislature on matters important to the university.”

Fenves negotiated the offer down to $750,000 a year, plus $50,000 in deferred pay. He also asked for a smaller potential bonus, down from 12 percent of base pay to 10 percent.

“It's very, very unusual, especially with what's going on today with presidential salaries. They keep going up and up and up,” said James Finkelstein, a public policy professor at George Mason University who studies executive compensation in higher education.

Ray Cotton, a lawyer who specializes in employment contracts for college presidents, agreed that asking for less money in high-level salary negotiations is "extremely uncommon."

"It's both a symbolic gesture, and a financially significant gesture as far as he and his family are concerned," he said.

Fenves, currently UT-Austin’s provost, will assume office in June. Current President Bill Powers earns $624,000 in base pay and another $44,000 in additional compensation.

In all, Fenves will receive $800,000 in annual compensation, with the possibility of a $100,000 performance bonus each year.

“He’s not underpaid by any stretch of the imagination,” Finkelstein said. Fenves earns $407,000 as provost.

But the idea that a president negotiated his salary downward has captured attention since the Austin American-Statesman reported on Fenves's pay on Tuesday.

Andrea Gore, the chair-elect of UT-Austin’s faculty executive committee and a pharmacology professor, said Fenves’s salary negotiations reflect an intimate knowledge of the financial constraints UT-Austin has experienced in recent years and the frustrations of faculty members.

“The motivation is to try to maintain really good relationships and to try to build bridges and try to mend some of the uncomfortable relationships that have been going on,” she said. “It can seem hypocritical for an administrator to take an enormous salary when people who are earning much lower salaries have not received significant -- even cost-of-living -- raises over the last several years.”

She continued: “He’s showing us that he gets it in a very quantifiable way.”

Powers, Fenves's predecessor and a nine-year veteran of the presidency, was at times criticized by the Legislature and the Texas governor for defending things like tuition increases, nonscience research and graduate programs that don’t bring in outside dollars, and affirmative action. The fraught relationship between Powers and UT-Austin’s Board of Regents and chancellor led to Powers's forced resignation (although on a timetable he agreed upon with regents) and the presidential search that produced Fenves.

Those tensions were likely top of mind as Fenves requested less money from the UT system.

“We think he’s showing leadership.” said Bill Hammond, the chief executive officer of the Texas Association of Business. Hammond has been a critic of perceived overspending among Texas higher education systems in the past.

“The cost of higher education is a major concern, and he’s playing his part in helping keep a lid on it,” he continued. “He’s putting his money where his mouth is.”

Fenves declined to comment for this article. The chairs of the higher education committees in both houses of the Texas Legislature did not respond to requests for comment.

Fenves, in a Feb. 28 email to Pedro Reyes, special assistant to University of Texas Chancellor Bill McRaven, said a base pay of $750,000 is a “highly competitive” salary, on par with compensation at other universities similar in scope and prestige to the University of Texas. He noted that University of Michigan’s new president, Mark Schlissel, former provost of Brown University, was offered a base salary of $750,000.

Fenves's email was a response to a terms sheet he was given as one of three candidates interviewed by the University of Texas Board of Regents.

Newly appointed Texas A&M University President Michael Young, who took office this month, earns $1 million in base pay and another $400,000 in additional compensation. McRaven earns $1.2 million in base pay and $400,000 in deferred pay and is eligible for bonuses. The president of the University of Houston's flagship campus, who also serves as the system's chancellor, earns $1.1 million in total compensation, according to the American-Statesman.

When A&M hired Young, system officials said he merited his $1.4 million compensation package because of his experience as president of the University of Washington and the University of Utah.

“It’s not about that Texas A&M’s [president] is making too much,” Hammond said, “it’s about that Greg was willing to make a very personal statement about the cost of higher ed.”

Young and officials at the Texas A&M system declined to comment for this article.

Hillary Hart, past chair of the faculty executive committee and a senior lecturer of engineering at UT-Austin, said that by asking for less money, Fenves is “sending a message about fiscal responsibility.”

“He just used the market prices for university presidents to figure out something that would be a competitive salary, without going above and beyond. Without blowing up the market,” she said. “People should ask when somebody is offered a salary and takes a salary: Is this fair? …Is this competitive or is it over-the-top?”

As an internal candidate, Fenves's knowledge of UT- Austin’s political climate and his understanding of faculty frustrations informed his decision to ask for less pay than initially offered. Both Gore and Hart said that while his request for less pay is refreshing, they wouldn’t have begrudged him a higher salary. After all, several public university presidents in Texas come with a $1 million price tag.

“When you get offered a high salary, it’s often the reaction to say, ‘OK, I’ll take it,'” Gore said. “We wouldn’t have given a second thought to him accepting a higher salary.”

Sometimes when an institution is freezing salaries, university presidents will forgo or defer their contractual raises. Some presidents regularly donate their annual raises to scholarship. Others have cut their salaries as they are about to announce big budget cuts, as was done during the 2008 recession. However, it’s very uncommon for a candidate to ask for less money up front, and not as a prelude to financial difficulty.

“This is an anomaly right now,” Finkelstein said. “I don’t think it’s going to be a catalyst for the larger conversation about executive compensation, and what’s fair and what’s reasonable.”

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