Do Outsized “Platinum Pensions” Belong in This Sector? Yale’s Pres Receives $8.5 Million in “Additional Retirement”

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May 20, 2015; New York Times

Remember all the consternation from conservatives about the retirement benefits owed to Detroit’s public sector workers? The concern was that rapacious public sector unions had concocted overly generous retirement packages for police officers and fire department personnel, leaving the city bereft as these former public sector staff bathed in the luxury of their taxpayer-paid pensions. Truth be told, the average Detroit public sector pension was in the range of $30,000 a year, in many instances much smaller than the pensions being paid to municipal workers in cities like Chicago. Nonetheless, some philanthropists, such as John Arnold, have attacked public sector pensions as threats to the economic wellbeing of cities and of society overall. Cities like Chicago do face huge pension obligations, but it’s not like the vast majority of those pensioned employees haven’t earned their retirements through doing the hard work of providing police, fire, sanitation, and other vital services to city residents.

Odd how little attention goes to the much larger “platinum pay” retirement benefits that occur in many sectors, including the gilded part of the nonprofit sector, without sparking similar outcry from pension-obsessed philanthropists. For example, Yale University revealed that it paid its former president, Richard Levin, an “additional retirement benefit” of $8.5 million after his 2013 retirement. Unlike those police and firemen who might have had to work a couple of decades at a top salary of, say, $60,000 to get a $30,000 or $40,000 pension, Levin’s pre-retirement salary at Yale was over $1 million.

Levin’s payout may be in the nosebleed territory, but other university officials, both public and private sector, seem to be doing pretty well. Ohio State’s E. Gordon Gee got more than $6 million when he retired in 2013, a figure that included deferred payments and severance, but his pre-retirement salary was over $2 million. Frank Bruni writes in the New York Times that other big payouts included $7 million for Shirley Ann Jackson when she left Rensselaer Polytechnic Institute, $3.75 million for John L. Lahey of Quinnipiac University, and $3.4 million for Lee Bollinger’s departure from Columbia University.

In Bruni’s estimation, “Each profligate compensation package breeds more like it, as schools’ trustees convince themselves that they must keep pace in order to recruit, retain, and receive the precious fairy dust of the heaviest hitters.”

Let’s be honest at least among ourselves. In the universities’ game of thrones, the occupants of the thrones make a huge bundle in their annual salaries, in their expectations of severances and retirement packages, and in outside fees from their service on corporate boards. In 2010, the New York Times reported that Mary Sue Coleman of the University of Michigan served on the board of Johnson & Johnson, the pharmaceutical behemoth, and was paid $229,978, half in cash, half in stock. RPI’s Shirley Jackson sat on five corporate boards, including IBM, FedEx, and Marathon Oil, and took in roughly a million dollars from those jobs on top of her university salary. Brown University’s Ruth Simmons had been a corporate director of Goldman Sachs and Pfizer during her tenure at the Providence school. In 2012, Harvard’s Drew Faust was nominated to the board of Staples, Inc., where board members are paid an average of $300,000.

It isn’t just a matter of a growing academic-industrial complex that pays university CEOs big dollars on top of their already massive salaries and extra retirement payouts. It is a matter of fairness. It is tiresome and obscene for the wealthy critics to go after municipal workers for their hardly luxurious wages and pensions while turning a blind eye to the extravagant salaries, retirements, and supplemental corporate incomes scored by the occupants of university C-suites. Does anyone else think that an extra $8.5 million for Yale’s Levin might be just a tad too generous?—Rick Cohen