Board extends Daniels’ contract; increases at-risk compensation to 50 percent

WEST LAFAYETTE, Ind. - The Purdue University Board of Trustees on Friday (Oct. 9) voted to extend the contract of Purdue President Mitch Daniels for two years through June 30, 2020, and increased the at-risk portion of the president’s pay to 50 percent while holding flat his guaranteed salary. With that adjustment, trustees said, Daniels will remain among the lowest paid of the 14 Big Ten presidents.

“Purdue University is an extraordinary institution of higher education,” said Trustees Chair Mike Berghoff. “Mitch Daniels is an extraordinary president. We recruited President Daniels for this position knowing his record for success running complex institutions. He took on a big job and has achieved well beyond our expectations thus far. He continues to prove that we can focus on affordability for our students and their families, we can hold costs while rewarding outstanding effort, and we can increase the value of the education and research for which we are known.”

Berghoff pointed to what he calls “the year of records” as evidence of Purdue’s growing success: Purdue’s fall 2015 enrollment climbed to 39,409, with the largest freshman class (6,812) since 2008 and most in-state freshmen (3,518) since 2010. Four-year (51.5 percent) and six-year (75.4 percent) graduation rates are records, retention is at an all-time high, and applications (45,023) also are at record highs. In addition, Purdue set records in fundraising ($343.4 million in the fiscal year that ended June 30), research funding ($401 million) and commercialization (178 new patents, 131 licensed technologies and 25 startups based on Purdue licenses). Berghoff noted, too, that Purdue’s reputation has grown vastly with more than 104,000 news media placements during 2014-15 for 1.4 billion impressions and an ad value of nearly $71 million, and an additional 673,400 social media mentions for nearly 1 billion impressions, all records by wide margins. All of these achievements have been accompanied by a declining cost of attendance and declining loan debt for students at Purdue.

“We see great things ahead and many reasons to extend the president’s contract at this juncture,” Berghoff said. Among those reasons, he said, are stability and continuity in Purdue’s various ongoing long-term initiatives that will extend beyond Daniels’ initial contract, including fulfillment of the Purdue Moves strategic objectives; completion of the State Street redevelopment project, along with the successful growth of the Purdue Aerospace Park; and the celebration of Purdue’s sesquicentennial in 2019.

Daniels’ initial contract, approved by trustees on Dec. 15, 2012, was valid through June 30, 2018. In a departure from traditional pay structures for university presidents, the contract at that time called for 30 percent of the president’s pay to be set aside as “at risk” and to be paid based on goals and metrics agreed upon by the board and the president each year.

With the new structure, Daniels’ at-risk portion will increase to $210,000 per year, or 50 percent of his guaranteed $420,000, bringing his total potential salary to $630,000 for each of the next five years. Trustees also implemented a retention incentive program, which provides Daniels with the opportunity to receive a payment on June 30 for each year he remains president. The first such payment, for 2016, would be $100,000, and the payment increases by $50,000 for each successive year through the remaining years of the contract.

“We continue to be among the few universities using an at-risk compensation formula,” said Tom Spurgeon, vice chair of the Board of Trustees and chair of the compensation committee. “It was at President Daniels’ request that he be paid a reduced guaranteed salary with a portion of his pay at risk. With this extension and at-risk pay adjustment, President Daniels will remain among the lowest-paid presidents in the Big Ten and among the very few higher education administrators with at-risk pay based on a metrics-based review.”

Trustees also voted Friday to provide Daniels $113,400 from the $126,000 pool of at-risk funds based on the metrics-based review of his performance during 2014-15. Compensation areas for 2014-15, adopted by the board in December 2014, cover student affordability, student success, fundraising, and institutional reputation and excellence. Based on weighted factors, trustees determined Daniels to be eligible for 90 percent of the available at-risk funds, bringing his total compensation for fiscal year 2014-15 to $533,400.

“We’ve said all along that a perfect score should be difficult to achieve,” Spurgeon said. “We will continue to work with President Daniels to set high goals. We expect much, and we are seeing what can happen when we provide these challenges.”

Spurgeon said Daniels was awarded 15 percent of 25 percent available in student affordability; 19 of 25 percent in student success; 40 percent of 30 percent available in fundraising for far exceeding goals; and 16 percent of a possible 20 percent in institutional reputation and excellence, which was a new category for 2014-15. A document summarizing those measures is available online at http://news.uns.purdue.edu/images/+BOTrustees/AtRiskSummary14-15.pdf.

Trustees and Daniels will work to refine the metrics as needed for 2015-16 and are expected to adopt any changes before the December Board of Trustees meeting. 

Source: Mike Berghoff, trustees@purdue.edu