In a story that, as far as I can tell, has gone unreported except by Vermont Digger, the University of Vermont’s Board of Trustees has chosen UVM’s next President. It happened at a Board meeting last weekend.
They’re not naming the name just yet; they have to negotiate a contract first. We won’t know Dan Fogel’s successor until late February, according to a UVM release. Negotiating on behalf of UVM will be the board’s Chair, Robert Cioffi.
(Who, FYI, is a native Vermonter who’s now a partner in a private equity firm* located in one of the tonier precincts of Connecticut. Gee, another one of them running something. There’s a surprise.)
Let’s hope they’ve made the right choice. UVM has, to put it mildly, a mixed track record in presidential selections. And to judge from the Vermont Digger account, it doesn’t look like the Board has learned very much from the Dan Fogel kerfuffle.
After the jump: big bucks, “modest revisions,” and octopus ink.
The Board also received a report (authored by, yep, Robert Cioffi) on the controversy over Fogel’s departure as President and the compensation package he received. The report highlighted concerns over the “corporatization” of UVM, but “without a clear definition of what this means.”
That’s actually a quote from the report. Really. If you don’t know what “corporatization” means, then how can you take effective steps to change it? And if you didn’t bother to define the term, how serious are you about reform?
On the subject of executive pay, which is certainly part of the concern over “corporatization,” the report basically stomped all over UVM’s critics. From VT Digger:
The report asserts a “widespread understanding” that salaries must be nationally competitive, but “tempered by some who believe that Vermont is unique and has different values, and should not be bound by the marketplace or a corporate culture.
There you go. Those who are critical of excessive compensation are depicted as “some who believe” in a warm fuzzy ideal of Vermont. And their concerns are obviously trumped by the “‘widespread understanding’ that salaries must be nationally competitive.”
A brief aside: There are a lot of salaries at UVM that are not at all “nationally competitive.” This is also true, as it happens, at Dartmouth. Both institutions operate on the unspoken assumption that the area’s natural beauty and lifestyle options are powerful draws. And I’m talking about fairly high academic positions. But not for top executives, no way, nossir, nohow. They need money.
In response to said report, the Board adopted what VT Digger rightfully called “modest revisions” of university policy.
…new wording says that the president will not be eligible to receive outside compensation without prior board authorization. A sentence was also deleted, the requirement that the president inform the board of “all compensation paid or assignable to him/her in consideration of his appointment; regardless of the source of funds.”
Maybe I’m uninformed, but… (a) I don’t remember “outside compensation” being an issue in the Fogel case, and (b) if the president can’t receive outside compensation but doesn’t have to inform the board of “all compensation,” then how is the new policy supposed to be enforced?
So, given the concern by “some” over executive pay, what can we expect UVM to offer its new leader? VT Digger says…
Based on equity criteria for senior UVM administrators, the president’s starting salary is likely to be around $400,000. The dean of UVM’s Medical School made $431,000 in 2010. Fogel’s top pay, not including other forms of compensation, was $322,563.
Well. If my math is correct, the new President can expect a 24% raise over what (the obviously undercompensated) Dan Fogel received. How did he manage to put food on the table?
A little perspective from UVM professor, State Senator, and ace blogger Philip Baruth:
Baruth wrote that he sees no substantial change in the way a future president will be compensated.
The public “has a right to insist that a strong, clear, enforceable policy on compensation help to direct the Board in such matters,” he concludes.
The public may have “a right to insist,” but it sure seems like the insistence isn’t producing results. Instead of clarity, we’re getting another cloud of octopus ink. The report downplayed the concerns of UVM critics and apparently produced no meaningful reforms. The presidential salary is about to take another huge leap. And it’s being negotiated by a venture capitalist — whose industry is a leader in skyrocketing executive pay.
To quote John McCain, that’s not change you can believe in.
*Correction 2/13/12: A reader pointed out that Robert Cioffi is not a venture capitalist, as I originally described him, but a partner in a private equity firm. Venture capitalists invest in startup companies, often in high-tech; private equity firms invest in — or take over — existing companies. In our current political discourse, “venture capitalist” has become the default term. Mitt Romney, for example, is often referred to as a venture capitalist, when in fact he was in private equity. My apologies for the error, and my thanks to the reader for correcting it.
The only (even slightly) reliable indicator for a venture capitalist when looking at an investment is the executive in charge of the operation. It is common knowledge amongst VCs that a good executive can make a bad idea work, but a bad executive will kill the best ideas. So, you learn to be very focused on getting someone you perceive to be “right”, no matter the price.
Add to this the commonly held notion (by everyone, not just VCs) that the person they hire for a job is “the right one”, and you can easily talk yourself into overpaying. It’s easier to believe in the magic associated with a star performer than it is to do the hard work of really understanding what you’re getting for your money. As we all know in our lives, if there is no substitute for something you need (college & health care come to mind) you’ll pay practically anything to get it.
Of course, accuracy in getting the “right” person is poor. Furthermore, a lot of people who are not difference-makers get paid as if they were, because those few real difference-makers set the market price. In other words, you can’t trust yourself to tell a real star from a fake one, so you have to pay them anyway! This makes the problem seem intractable, but in fact there are well known ways to mitigate these forces.
For example, you set a salary range before the interviews start, and strictly eliminate anyone who has a problem with it. Most importantly, you have to have 2-3 candidates you can live with and bargain with all of them, as the pay they will require is a fundamental issue with whom to hire in the first place!
Face it, if person X (already chosen by the board) knows that they are the only game in town, X will demand a “star” salary. Conversely, if there is an easy substitute named “Y” waiting in the wings, X’s demands will be lower. We expect the board to conserve the state’s funds, and that’s how you’d do it in this case. If they are too stupid or venal to accomplish this, then the governor needs to change the membership as quickly as the law allows.
There are a couple of trustees appointed by the Legislature to represent their interests on the Board. One of them, Kesha Ram, is a relatively recent graduate of UVM. It would be nice to know what her opinion was on this matter, if any. If she went along with the rest of the Board in acquiescing to these laughably “modest” changes and by using a disturbing logic that well, if a college president fails to perform their job properly, you should pay his succesor even more so as to hope they perform the job better. I would hope that the Democratic legislators sitting on the Board pushed for something better than this rotten deal. If not, it shows that in their perspective it’s best to go with the flow while at the same time allowing the administration to squeeze every last ounce out of the faculty and staff. I’m afraid they’ll show that they’re about as useful as a bucket of warm spit.
Not sure why anyone would want to single out Kesha Ram, when the UVM board includes 9 legislators. All these nine need to do is gain 3 more votes and they control the UVM board. The other eight legislative members are: Bill Botzow, Carolyn Branagan, Christopher Bray, Harry Chen (Now retired from the legislature.), Joan Lenes, David Potter, Donna Sweaney, and Jeanette White. Maybe it is time to eliminate legislative members of the board and thus remove the internal lobbying operation!