Pitt Compensation Panel Accepts Chancellor’s Recommendation That University Officers’ Salaries Be Held at Current Levels

The Compensation Committee of the University of Pittsburgh Board of Trustees met Dec. 3 to review salary increase recommendations for the officers of the University for the fiscal year that began on July 1, 2008. Salary increase decisions for all other University employees were made last August, following the board’s adoption of Pitt’s annual operating budget. That budget contained a salary increase pool of 4.0 percent, and the average salary increase for continuing faculty members was 5.2 percent.

Throughout the University, salary increases are heavily tied to performance during the preceding year. For that reason, decision-making with respect to salary increases for University officers customarily is deferred until after the data required to assess institutional performance in key areas such as enrollment, finance, and fundraising have been finalized.

In commenting on the levels of success attained by Pitt during the past year, Board of Trustees Chair Ralph J. Cappy, who presided at the meeting, said, “This has been another year of extraordinary progress for the University of Pittsburgh. In fact, levels of achievement and impact in key areas of activity make this past year stand out as one of the most remarkable in our University’s proud 221-year history. Many people have contributed to these successes. However, much of the credit clearly belongs to its capable, committed, and creative senior leadership team.”

Among the many highlights cited by committee members were the following:

Pitt recruited its best-qualified freshman class ever from the largest applicant pool in its history. In 1995, Pitt received 7,825 applications for admission to the undergraduate programs on its Pittsburgh campus. By 2007, that number had jumped to 19,056, and last year, it rose to 20,639. Over the course of that same period, average SAT scores rose from 1110 to 1262; the percentage of freshmen ranking in the top 20 percent of their high school graduating classes rose from 39 percent to 78 percent; and the percentage of freshmen ranking in the top 10 percent of their high school graduating classes rose from 19 percent to 48 percent;

Pitt’s research expenditures continued to rise, as did its national research rankings. The University’s annual research expenditures rose to nearly $642 million, compared to $230 million in 1995 and $620 million in 2007. During the past year, Pitt improved its research rankings by moving into the sixth position nationally in levels of funding attracted by its faculty from the National Institutes of Health and into the 10th position nationally in total federal science and engineering research and development support;

Pitt broke virtually all of its existing records for private fundraising in a single year. Among the records set during the past year were those for commitments made ($183 million), gifts received ($126 million), foundation support ($72 million), individual support ($85 million), and total donors (50,213). The University’s $2 billion capital campaign raised $1.273 billion as of June 30, 2008, and last month passed the $1.3 billion mark;

Pitt added to its impact as an engine for regional development. According to a policy paper recently released by the American Association of State Colleges and Universities, every $1 million of research and development spending generates 36 jobs. By this measure, Pitt supports more than 23,000 local jobs through its research expenditures alone. The University continues to play a major role in technology-based economic development initiatives, and its own technology management efforts led to 100 new patent applications, 36 new patents, 58 licensing and option agreements, and three start-up companies during the past year. The Compensation Committee also cited, as one example of Pitt’s community commitments, the work done by Chancellor Nordenberg in chairing the Citizens’ Advisory Committee that recommended the consolidation of the governments of Allegheny County and the City of Pittsburgh; and

Pitt continued to be ranked in the very top cluster of the country’s public research universities. “The Top American Research Universities,” an assessment annually produced by the Center for Measuring University Performance, groups universities based on their performance across nine objective measures relating to research, faculty strength, graduate and postdoctoral programs, undergraduate academic credentials, and levels of private support. For the second consecutive year, Pitt was ranked in the study’s very top cluster—a group limited to Berkeley, Illinois, Michigan, North Carolina, Pitt, UCLA, and Wisconsin.

As has been its practice for many years, the Compensation Committee retained Towers Perrin, a global professional services firm, to act as its independent compensation consultant and to benchmark officer compensation at peer research universities. According to that study, Pitt continues to lag significantly behind its peers in officer compensation.

In commenting on the performance of the other officers—Jerome Cochran, executive vice chancellor and general counsel; B. Jean Ferketish, secretary of the Board of Trustees and assistant chancellor; Arthur S. Levine, senior vice chancellor for the health sciences and dean of the School of Medicine; James V. Maher, senior vice chancellor and provost; Amy K. Marsh, treasurer and chief investment officer; and Arthur G. Ramicone, vice chancellor for budget and controller—Chancellor Nordenberg stated that the strength and stability of that group had contributed immeasurably to the University’s ongoing record of progress. He continued by stating that, in more normal times, both their high levels of performance and the benchmarking data showing that their salaries lag behind their peers would have justified substantial salary increases.  However, in light of the challenging economic times, he recommended that all officer salaries, including his own, be held at current levels.

In further explaining this recommendation, Chancellor Nordenberg stated, “In my Oct. 1 update to the University community, I attempted to deliver an appropriately balanced message. On the one hand, I reviewed the very substantial achievements of the recent past, referred to the fact that turbulent times can present special opportunities for comparative progress, and encouraged everyone to make maintaining Pitt’s momentum a priority. At the same time, I described some of the many different fronts on which the University would face financial challenges and stated that broadly shared sacrifices almost certainly would be required. It simply seemed appropriate that those sacrifices begin with the officers of the University, and I want to emphasize the fact that this action not only is being recommended by me but is supported by the entire team and is a clear reflection of the officers’ overriding commitment to our University.”

Board Chair Cappy, speaking for the Compensation Committee, described its reasons for accepting this recommendation. “For the past 13 years, and specifically during the past year, the team led by Chancellor Nordenberg has performed superbly and has helped elevate the entire University. Their efforts have played a major role in transforming Pitt into a much stronger institution, characterized by ever-higher levels of achievement and impact. The beneficiaries of their efforts include everyone who cares about Pitt—alumni, faculty, staff, and students, as well as the communities that we call home. Based on their performance, it is clear that the members of this officer team would have earned substantial salary increases in almost any other year. In fact, it may seem incongruous that the University has just moved through what may be the best year in its history, and yet this board committee is approving a recommendation that University officers receive no salary increases. However, the committee understands that we are moving through uniquely challenging times and accepts this recommendation, advanced by the Chancellor and supported by the other officers, as another example of the Pitt-first attitude that has characterized the distinguished service of this leadership team.”