Purdue trustees approve at-risk compensation for Daniels

WEST LAFAYETTE, Ind. – The Executive Committee of Purdue University's Board of Trustees on Wednesday (Nov. 5) voted to provide President Mitch Daniels $110,880 from a pool of $126,000 in at-risk funds based on a metrics-based review of his performance over the past fiscal year.

Daniels' contract calls for several at-risk compensation areas that cover student affordability, fundraising, graduation rates, and means of measuring student growth and institutional excellence. Based on these weighted factors, trustees determined Daniels to be eligible for 88 percent of the total $126,000 in available at-risk funds, or $110,880. A document summarizing those measures is available online.

The salary adjustment, for 2013-2014, brought Daniels’ total compensation for the fiscal year to $530,880. Had he received the full 100 percent of pay, Daniels would have received $546,000. Daniels’ total compensation is lower than his Purdue predecessor, who, in the final contract year, received total compensation of $555,000.

''We believe we are one of few universities using an at-risk compensation formula,'' said Michael Berghoff, chair of the board's Compensation Committee, which made the recommendations to the Executive Committee. ''The metrics that we define help understand whether we are making progress in areas important to our stakeholders, the board and President Daniels: making a Purdue education impactful and transformative, while keeping accessibility, quality, affordability and value at the forefront.''

Thomas Spurgeon, chair of the Board of Trustees, said, ''President Daniels has talked a great deal about affordability and accountability. Those are not just institutional values to him, but personal values as well.''

Spurgeon said significant progress on lowering student debt led trustees to award Daniels the full 25 percent available under that category. He was awarded 21 percent of 25 percent available for graduation completion, 25 percent of 30 percent available under fundraising, and 17 percent of the 20 percent available under committee actions on student growth and institutional excellence.

Berghoff said that a ''perfect score on the metrics should be difficult to achieve in any given year.

''The critical part of this process is examining a variety of possible metrics and finding ones that measure the things that matter, coming up with a way to meaningfully measure progress for each goal, and then deciding what weight to assign to those goals.''

Goals and weights are revised each year and mutually agreed upon by Daniels and the board. When trustees originally approved Daniels’ contract in December 2012, it was a departure from more traditional pay structures used for university presidents, Spurgeon said.

''This structure put in place those at-risk performance categories where we could identify progress toward our major goals and efforts,'' he said. ''We continue to refine and adjust based on what we learn and our progress toward these goals.''