Updated 1:45 p.m.
Former University President Richard Levin received an additional $8.5 million payout from Yale after his retirement.
The “additional retirement benefit” was disclosed in the University’s latest federal tax return, filed Friday, and came to $4.4 million after taxes. According to the filing, it was calculated by multiplying 75 percent of Levin’s final presidential salary by the 20 years he served, and then subtracting the annuity value of other Yale retirement benefits.
It was structured to provide targeted income replacement in retirement, University Spokesman Tom Conroy said. The benefit reflects the “careful deliberation and judgment” of the Yale Corporation over time, he added. The body began discussing the payout in 2002, with the assistance of outside consultants.
Richard Vedder, director of the Center for College Affordability and Productivity, said the payment represented, as far as he knew, the largest ever in American higher education. “And it is the largest by a fairly substantial amount,” he added.
John Pepper Jr. ’60, a former Corporation member, told the Wall Street Journal, which first reported on the payout Tuesday evening, that the Corporation believed such a benefit was necessary in the face of offers Levin may have been receiving from other industries.
“We thought that doing this was vital to retaining his leadership for the long-term,” he said. “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.”
Pepper said in an interview with the News that Levin was a standout president, calling him the “best of his generation of university leaders.”
But Vedder said that historically there has been very little movement of leaders in higher education to the corporate sector. As a result, he said, the belief that Levin would have left Yale for a higher-paying job may have been unjustified.
“It is theoretical since I don’t think in this case President Levin was facing any particular — or at least indicated — any big job opportunities elsewhere,” Vedder said. “The notion that university presidents are sort of interchangeable with corporate executives is, I think, a questionable one.”
In 2013, his last year at Yale, Levin took home $1.15 million, making him the 10th-highest-paid private university president in the country, according to the Chronicle of Higher Education. He is currently the CEO of Coursera, an online education company.
Roland Betts, who was a senior fellow of the Yale Corporation in 2004 when Levin’s supplemental retirement benefit was put in place, said the Corporation noticed early in Levin’s tenure that he was transforming Yale. When Levin reached his 10th anniversary in office, Betts said, the Corporation acted to encourage Levin to remain at Yale for many more years. They were successful, he added, as Levin served as University President for two full decades — more than three times the average tenure of research university presidents today.
Conroy, too, dwelled on Levin’s accomplishments. Levin oversaw the University’s largest building and renovation program since its transformation between the World Wars, Conroy said.
“New construction added 40 buildings and 60 underwent comprehensive renovations — fully 70 percent of the campus as it existed when he took office,” Conroy said. “There were major advancements in sciences and the arts. Eleven new academic departments were created and 15 new academic majors were added.”
Conroy added that Levin guided Yale to its current status as a global university, while making Yale an early leader in campus sustainability. Levin also quintupled the annual financial aid budget, raising it from $24 million to $120 million during his tenure.
Additionally, the endowment grew from $3.2 billion to $19.4 billion under Levin.
Margaret H. Marshall, Senior Fellow of the Yale Corporation, said Levin’s leadership was equally as exceptional during his last 10 years as University President as it was during his first decade.
“During his presidency, Yale became a thoroughly global university; he transformed the physical structure of campus; dramatically increased financial aid, deepened Yale’s relationships with the city of New Haven, and raised funds to enable the expansion of Yale College,” Marshall said.
Still, Vedder said payouts of this sort may not last. Large payouts to university officials across the country have garnered enough public attention that they may face legislative constraints, he said, adding that since Yale and other private educational institutions receive government funding for research — and yet maintain special tax-exempt status — there may be bipartisan support for limiting these types of pension payments to executives.
Marshall told the Journal that sitting University President Peter Salovey is not guaranteed a similar payout.
“If Yale has a president who, after a decade, emerges as another transformational president, the Corporation will once again take a very hard look at his compensation,” she said. “Nothing becomes precedent for the future.”
Tyler Foggatt contributed reporting.