Last Thursday, students gathered in Beinecke Plaza to hold a protest concerning the recent announcement that University President Richard Levin will receive a $350,000 bonus this year. The protesters hosted a mock cocktail party congratulating President Levin on his raise, and they circulated flyers urging financial aid reform following last year’s $400 increase in the student self-help portion of financial aid. For many Yale students, it seems egregious that President Levin would receive such a substantial bonus — one that he could certainly survive without — in light of the University’s demand that its least fiscally secure students contribute more to their financial aid packages.
But the question of executive compensation, and more broadly of what one deserves for his or her work, is a complicated issue that cannot be settled by strident cries of injustice and vague calls for “reform.”
In the first place, Richard Levin has done extraordinary things for the University that all Yale students should recognize. When Levin assumed the presidency in 1993, the University’s endowment was valued at roughly $3 billion. Since then, Levin and his team of investment advisors made incredibly wise decisions concerning how to invest Yale’s money and increased the University’s endowment by roughly $20 billion prior to the recent fiscal crisis, which has done severe damage to nearly all colleges’ endowments. This massive increase in Yale’s endowment was entirely unprecedented and has gone a long way towards improving the quality of life and education of Yale students. That’s something that we ought to be grateful for, not resent.
In addition, Levin’s plans for renovating Yale’s residential colleges proved successful and worthwhile. Our living spaces are clean, well-furnished and aesthetically pleasing. Our facilities are abundant and top-notch. Anyone who has visited the nation’s other top-ranking schools will plainly see that Yale gained a competitive edge by undergoing such thorough renovations, and we enjoy the fruits of Levin’s ambitious renovation project on a daily basis.
It is most important to note that President Levin dramatically increased the availability of financial aid for students who seek it. While Thursday’s protesters were quick to condemn Levin for enjoying a bonus at the supposed expense of Yale’s least well-off students, they neglected that under Levin’s tenure as president, the self-help portion of financial aid has dropped substantially. In 2001, student self-help ranged from a low of $5,500 to a high of $10,420. Now all students seeking financial aid are expected to pay $3,000 in self-help.
Of course, none of this is to suggest that President Levin can do no wrong or that his actions will always be beyond reproach. But I am willing to argue that in light of these facts, there is an element of frivolity and intellectual laziness underlying the harsh criticism that the president has recently received.
The recent increase in the student self-help portion of financial aid is not relevant to the issue at hand — Levin’s bonus — as the self-help increase was fiercely protested long before Levin’s bonus was ever announced, and one could reasonably expect that students would complain about a bump in Levin’s pay even if the self-help portion of financial aid had never been raised at all. Further, Yale spends money on a lot of things that theoretically could be redirected towards making tuition more affordable for low-income students, but none of the protesters complained about any of that spending — their only concern was Levin’s bonus. Thus, for these protests to have any substance at all, an argument must be presented as to why the bonus is in itself unjustified.
And such an argument has not yet been made. Levin oversees a corporation that recovered $400 million last year following substantial losses due to the financial crisis. Considering these gains, is $350,000 (0.0008 percent of the endowment rebound) an inappropriate amount to add to his pay? Frankly, I’m not qualified to judge, and neither are Thursday’s protesters. My point is not that $350,000 was the perfect amount to add to Levin’s salary; I only seek to criticize those who regard it as self-evident that a $350,000 bonus is exorbitant and unjustified, without giving any thought to what Levin has done for the University and its least well-off students, and without taking the time to consider any other factor that ought to help determine what Levin should be paid.
Executive pay is a complicated issue, and there are no obvious answers — there is no universally accepted, objective standard as to what constitutes “reasonable” compensation for one’s work. I only regret that last Thursday’s protesters were so quick to condemn what may in fact be an entirely justified raise on such dubious grounds, and that they did so in such a haughty and obnoxious manner.