Most students are not paid for their extracurricular activities. But top University administrators can be paid hundreds of thousands of dollars for theirs.
Yale President Richard Levin and University Secretary Linda Lorimer, who are both members of the governing boards of Fortune 500 corporations, receive hefty payments in the form of stock options and cash for their duties every year. But neither comes close to making as much as Stanford University President John Hennessy, who raked in over $1 million in just one month last year, according to reports by the Wall Street Journal.
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Levin, who is currently a director at American Express and Satmetrix and who sat on the board of Lucent Technologies until last year, received at least $130,000 in 2005 for his corporate duties, according to forms the companies filed with the Securities and Exchange Commission. Since Satmetrix is a privately owned company and does not have to report its directors’ compensation to the SEC, Levin’s American Express earnings are only a portion of what he earned last year, Lorimer made over $230,000 in cash and stocks for her roles on the boards of McGraw-Hill and Sprint and holds over $1 million worth of stock options at Sprint.
Levin and Lorimer receive their corporate pay packages on top of their compensation for their jobs at Yale. In 2004, the last year for which such data are available, Levin made $779,000 in salary and benefits and Lorimer made $384,000.
Although their duties to academia and corporate America might seem incongruous to outsiders, top administrators at universities frequently serve on corporate boards, said School of Management professor Shyam Sunder, who specializes in corporate governance. Administrators’ roles on corporate boards can also be a fundraising tool for their institutions, he said.
“There is some pressure on corporations to bring in nonbusiness people to give a sense of the broader responsibility of corporations to society,” Sunder said. “Since the job of presidents has increasingly involved retaining substantial sums to run the universities, it is also increasingly attractive for university presidents to sit on these boards.”
Sunder said many corporations have tried to bring in more outsiders to their boards over the last several decades in an effort to increase the diversity of thought among the directors. Corporations routinely court top university administrators, deans and law and business professors, he said.
Hennessy, who became Stanford’s president in 2000, is an entrepreneur and investor who has close relationships with many of the companies with which Stanford does business. Over the past 5 years, he has made around $43 million from his corporate activities. Observers have credited Hennessey’s corporate ties with helping him raise massive sums of money for his university — over $900 million last year, the most of any school in the country.
Levin said his limited activities do not detract from his commitment to being president. He said he serves on fewer boards than many of his peers because of time constraints.
”One has to be judicious about one’s time,” he said. “Overwhelmingly my No. 1 commitment is serving Yale.”
Serving on a board can be an instructive experience and can provide models for running a nonprofit like Yale, Levin said.
“I find it very valuable to see how other organizations work,” he said. “There is a level of professionalism in these large companies that is interesting to observe.”
Lorimer was unavailable for comment.
The University requires all faculty and administrators to submit a form outlining their commitments to outside organizations in an attempt to identify any possible conflicts of interest. Faculty members report to the provost, officers report to Levin, and Levin reports to the Yale Corporation. Levin said he does not know of any cases in which an officer has recused himself from making a decision because of outside commitments. But, he said, the University takes conflicts of interest very seriously.
“Officers with children in Yale College don’t vote on the Yale College term bill,” he said.