Pitt Board Sets Officers’ Compensation

PITTSBURGH–The Compensation Committee of the University of Pittsburgh Board of Trustees met today to set the fiscal year 2013-14 salary for University Chancellor Mark A. Nordenberg and to review and approve salary recommendations made by Chancellor Nordenberg for seven other University officers. Compensation decisions for most University employees are made in late summer, after the Commonwealth appropriation has been finalized and the University’s fiscal-year operating budget has been approved. However, the Compensation Committee customarily has deferred its decision-making until later in the year so that more complete measures of institutional progress can be considered before officer salaries are approved.  

In commenting on the past year, Board of Trustees Chair Stephen R. Tritch, who also chairs the Compensation Committee, stated: “This past year was a special year for the University in two historic respects: We concluded a year-long celebration of the 225th anniversary of Pitt’s founding, and we helped secure the future of the University by surpassing our $2-billion fund-raising goal. It also was another in a long succession of years in which the institution’s officers led the University of Pittsburgh to new levels of accomplishment on virtually every front.”

Among the many forms of progress cited by the Compensation Committee were the following:

• Reflecting both its overall attractiveness and the stature of its educational programs, the University set yet another record for the number of applications to the undergraduate programs of the Pittsburgh campus, the University’s largest programs. The University received 7,825 applications for admission to these programs for the fall of 1995; 24,871 for the fall of 2012; and 27,634 for the fall of 2013. This fall’s applicant pool, then, was 253 percent larger than the pool for 1995 and 11 percent larger than the pool for 2012, which had been Pitt’s record-setting year.
• Once enrolled, students continue to perform at the highest levels. During the past year, Pitt students claimed three Goldwater Scholarships, one Udall Scholarship, twenty-one National Science Foundation Scholarships, five Boren Scholarships, six critical language scholarships, and two Whitaker International Bioengineering Fellowships. Pitt also was recognized as a top producer of both student Fulbright Scholarship winners and of graduates who join the Teach for America Corps.
• The University was ranked among the top six national universities in terms of the percentage of graduates who benefitted from an internship experience. Also, during the past year, the University announced its new program to guarantee every undergraduate the opportunity for an internship.
• The University conducted another record-setting United Way campaign. Pitt Make a Difference Day attracted a record number of students who devoted a day to working on community improvement projects. These and similar efforts were recognized by the Mayor with a proclamation honoring Pitt’s public spirit.
• Pitt retained its position among the top five American universities in terms of the federal research and development support annually attracted by members of its faculty. A new study released by the National Taiwan University ranked Pitt twelfth among all world universities in terms of its research productivity, research impact, and research excellence. Science magazine also ranked the University one of the top four academic settings to work in the United States.
• Faculty members continued to earn the highest forms of recognition in their disciplines, including election to the Institute of Medicine, the American Association for the Advancement of Science, and the American Academy of Arts and Sciences. More junior faculty members also continue to capture awards of note. During the past year, those honors included a prestigious NSF CAREER Award, given to junior faculty members “who demonstrate great understanding of their fields through ground-breaking research.” Such forms of recognition, which can take many forms, are evidence that the pipeline of Pitt talent continues to flow.
• The University was able to secure an early departure from the Big East Athletic Conference, permitting it to begin competing in the Atlantic Coast Conference this year. This move will bring substantial academic, outreach, and revenue benefits for the University.
• Despite the general concerns expressed by ratings agencies about the fiscal health of the higher education sector, Pitt also received a long-term rating upgrade – from AA/stable to AA/positive from Standard & Poor’s. Among the factors cited to support that upgrade were fundamental credit strengths; a strong and proactive management team; the successful completion of a facilities plan; stable enrollment, strong student demand, and high student quality; good revenue diversity; and impressive fundraising successes. 

The Compensation Committee also noted that the past year marked the 30th anniversary of the decline of the Pittsburgh regional economy to its low point, when unemployment hit 18 percent, following what has been described as the collapse of the steel industry and the loss of much of the region’s traditional manufacturing might. “Obviously, there has been a big turnaround since then,” Board Chair Tritch said, “much of it fueled by the ‘eds and med,’ which now account for more than one out of every five regional jobs. Pitt has been a key driver behind the ‘eds and meds’ consistent and dramatic gains.”

Examples cited by the Committee were:

• Since 1995, Pitt’s own employee base has risen from 9,671 to 13,372 – an increase of 38 percent and more than 3,700 employees. Much of that employment gain is attributable to the dramatic growth in the University’s research expenditures – from $240 million in 1995, to more than $800 million in 2012 (when the federal stimulus program was in place), to about $760 million last year. Pitt’s employment also was higher before dramatic decreases in state support led to the implementation of the University’s recent voluntary early retirement program, which triggered the departure of more than 350 experienced employees.
• Since 1995, the University’s endowment has grown by six and one-half times, from $463 million to over $3 billion; its net assets have quadrupled, from $997 million to nearly $4 billion; and the University has added some 3.6 million gross square feet of facilities space. In short, Pitt has increasingly become one of the region’s most important economic anchors.

In commenting on the officer salary increases recommended by the Chancellor, Board Chair Tritch stated, “Clearly, many people have made significant contributions to the progress of Pitt. It is very clear, however, that the University has benefited greatly from the tireless efforts of a very talented leadership team. One of the most important aspects of the Board’s oversight responsibilities is to ensure that the officers of the University are appropriately compensated, remaining mindful of the academic culture, the metrics of the marketplace, and the financial circumstances that may be faced at any particular point in time. It has been the Committee’s consistent practice to retain an independent compensation consultant. Based on that consultant’s work, the Committee remains concerned that our officer group lags behind some appropriate benchmarks, particularly given the seniority and demonstrated effectiveness of its members.

In commenting on the Chancellor’s salary increase, Board Chair Tritch said, “Mark Nordenberg now is moving through his nineteenth, and final, year as Chancellor of the University. He has led Pitt through an extended period of remarkable progress and now is one of the most senior, and most successful, university leaders in America. Throughout his service, Chancellor Nordenberg’s compensation has lagged behind the compensation received by many of his peers. The existence of that gap is not reflective of any reluctance on the part of the Compensation Committee to raise his compensation. Instead, it is the product of his own resistance to any salary increases beyond those of a modest size. This year, he has again requested that his increase be lower than the lowest of the percentage increases awarded to any other officer. Consistent with that request, his salary will be increased by 3.0 percent.”

The deferred decision-making practiced by the Committee enables the members to receive more accurate contextual information regarding the raises received by other University employees once the salary-increase pool included in the operating budget has been distributed. In this fiscal year, for example, though the salary-increase pool built into the University’s operating budget was 2.5 percent, the average increase for faculty members was 4.3 percent. Further, 23 percent of faculty members received increases of 5 percent or more, and more than 7 percent of faculty members received increases of 10 percent or more during the current fiscal year. The recommendations made by the Chancellor are clustered around the average faculty salary increase of 4.3 percent, with the comparatively modest percentage increases between officers typically reflecting benchmarking differences. 

The salaries and percentage increases approved by the Compensation Committee are: Chancellor Mark Nordenberg, $597,500, 3.0 percent; Patricia Beeson, senior vice chancellor and provost, $392,500, 4.9 percent; Jerome Cochran, executive vice chancellor, $512,500, 4.0 percent; B. Jean Ferketish, secretary, Board of Trustees and assistant chancellor, $225,000, 4.2 percent; Arthur Levine, senior vice chancellor health sciences and dean, School of Medicine, $817,500, 3.8 percent; Amy Marsh, chief investment officer, $425,000, 4.9 percent; Art Ramicone, chief financial officer, $372,500, 4.3 percent; and Jerome Richey, general counsel, $365,000, 4.3 percent. 

Each of the salary increases approved by the Compensation Committee today will be retroactive to the July 1, 2013, beginning of the current fiscal year. 

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12/3/13