Levin’s $8.5 million retirement benefit

Mark Ostow

Former president Rick Levin ’74PhD was rewarded for staying at Yale. View full image

The deal was struck 13 years ago, and the payment was made in 2013. But the requirements of federal tax reporting are such that the world first learned on May 20 that Yale had paid $8.5 million to Rick Levin ’74PhD in a lump-sum “additional retirement benefit” when Levin stepped down as president of Yale two years ago. The revelation immediately became fodder for an ongoing debate about pay for university presidents.

The payout, noted the Wall Street Journal, highlighted “the increasingly lucrative compensation for leaders at the nation’s top universities.” New York Times columnist Frank Bruni followed with a blistering opinion piece that likened Levin’s benefit to the lavish salaries of modern CEOs. “The lofty pay of college presidents is part of higher education’s increasingly corporate bent, of the blurred lines between the campus and the marketplace,” Bruni wrote.

Yale issued a statement defending and giving context for the payment: by 2002, the statement explained, the Yale Corporation (the university’s board of trustees) was impressed by Levin’s nine years of leadership and eager to explore ways to encourage Levin to stay at the university for as long as possible. In consultation with compensation experts, the Corporation devised the benefit, which would (and did) vest in January of 2013.

Yale’s statement enumerated Levin’s many achievements—among them 40 new buildings, 60 renovated buildings, Yale’s emergence as a global university, a quintupling of financial aid. The statement also quoted John Pepper Jr. ’60, the former Procter and Gamble CEO who was the Corporation’s senior fellow in 2003 (and later a vice president of the university), who called Levin “as talented a leader as I have seen in any walk of life.”

Expert observers differ on their opinions of the payment. “It is extraordinarily large, and strikes me as over the top,” says Richard Vedder, an economist whose books include Going Broke by Degree: Why College Costs Too Much. But Ron Ehrenberg, a Cornell professor studying the economics of higher education, has a more nuanced take: “My initial reaction was, ‘Wow, that’s a lot of money,’ and that’s still my reaction. But on the other hand, this was a really long-term deferred compensation agreement.” And very seldom does a president remain at a university for one decade, let alone two. Toward the end of his term, Levin’s base compensation fluctuated, but he was often reported among the highest-paid private university presidents. For 2011, for instance,* the Chronicle of Higher Education ranked Levin’s total compensation as tenth among his peers, at $1.65 million. (Robert J. Zimmer of the University of Chicago topped the list, at $3.35 million.)

But despite this context, critics like Vedder worry that universities lose “moral high ground” when large sums like these grab headlines. There was a time, he says, when “being a university president was like a calling, like being a minister or a priest,” adding that top public servants like US Supreme Court justices only make around $250,000 per year.

Pepper, though, compares Levin’s pay to the private sector, telling the Wall Street Journal: “He could have been in investment banking, he could have been in venture capital, he could have run a corporation. Obviously, if he’d gone into other fields, the compensation would be orders of magnitude greater.”

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* This sentence has been corrected. Here and inour print edition, we originally referred to 2011 as Levin's “last full year as president.” But he did not step down until June 2012.