OSU doubled executive pay under Gee

The top 27 executives under Gee had a combined base pay of $11.86 million in 2011, plus another $2.2 million in bonus compensation, a Dayton Daily News investigation found. That was more than double the compensation paid the 20 top managers in similar positions under Gee’s predecessor Karen Holbrook, who left the university in June 2007. Holbrook’s senior staff made $6.1 million in base pay in 2006, plus another $490,000 in bonus money.

The highest-paid executive under Holbrook in 2006 made $755,762. Eight of Gee’s senior staff took in more than that in 2011, with five managers topping $1 million. Those amounts exceed the compensation paid most public university presidents across the nation, according to data from the Chronicle of Higher Education, which studies executive pay.

Gee’s executive vice president and provost, Joseph Alutto, received $1.18 million in 2011. Only two public university presidents, including Gee, made more that year.

Gee, who returned to OSU in October 2007 after a nine-year hiatus, told the Daily News the school’s pay packages have allowed him to recruit top talent to the university.

“When I returned, I made a very strong commitment that we would recruit the best people in the country,” Gee said, adding that his top executives are held to metrics “which are incredibly difficult to reach.”

The compensation is necessary “to make certain that we get the very best,” he said.

But the executive pay amounts drew harsh criticism from a conservative think tank as well as a leading expert on college affordability.

“At a time when state and local governments are looking for ways to cut funds, I would think this would be very difficult to justify,” said Robert Alt of the Buckeye Institute, a conservative economic policy non-profit based in Columbus.

Richard Vedder, an economist at Ohio University and director of the Center for College Affordability and Productivity, called the compensation totals “outrageous.”

“That is spectacularly, fiscally irresponsible behavior on the part of President Gee and it is endemic of the problem in higher education,” Vedder said.

The Daily News investigation found that the average gross pay for top administrators under Gee climbed 63.6 percent to $539,390, compared with $329,674 under Holbrook. During that same period, real median Ohio household income dropped 7.9 percent to $45,749, while tuition and fees at Ohio State were increased by 20.4 percent.

The Daily News has been examining Gee’s spending for more than a year. Earlier this year the newspaper found that Ohio State spent $7.7 million on Gee’s travel, housing and entertainment since he returned to Columbus. Documents the Daily News obtained from Ohio State revealed that the university spent at least $895,000 for gatherings at the president’s mansion, $574,000 on private jet travel for Gee and $64,000 on bow ties, bow tie cookies, O-H lapel pins and bow tie pins for university marketing.

Sara Kilpatrick, executive director of the Ohio Conference of the American Association of University Professors, said increased administrative overhead at Ohio State and other universities contributes to “an administration tax” on students who “are being crushed by debt.”

“We see more and more students turned away by the high cost of education,” Kilpatrick said. “This whole model of treating the university like a business is the wrong model, especially for a public institution.”

‘Unbelievable talent’

Gee, 68, is expected to receive his annual evaluation — and possibly a raise and bonus — from the OSU Board of Trustees when it meets on Thursday and Friday in Columbus. He made $1.9 million last year, including deferred compensation, supplemental retirement and a bonus.

Gee’s compensation for fiscal 2011 was 12.3 times that of the average full professor, the highest pay ratio of any public university, according to a Chronicle of Higher Education study. That compares to a ratio of 3.1 for the typical public university, using median pay for presidents and full professors.

Vedder said before deciding on a raise or bonus, the trustees should benchmark the total cost of Gee’s travel, housing, compensation and senior team salaries against those same costs at other peer and Big Ten universities. “He is not a superstar. He is not three standard deviations ahead of anybody else, but his pay is three standard deviations from everybody else,” Vedder said. “He is way on the upside on the pay scale. I wouldn’t consider giving him a salary increase.”

University of Michigan President Mary Sue Coleman, who makes $845,105, is the third highest-paid president in the Big Ten and the fifth highest-paid public university president in the U.S., according to the Chronicle. Gee tops the 2011 list at $1,992,221, while Texas A&M University System President Michael D. McKinney is a close second at $1,966,347.

Gee is well liked by state leaders, students and university trustees. Last year, trustees praised Gee during his annual evaluation, calling him a visionary with an unusual capacity to see the big picture, and a leader with “unbelievable” talent.

“He was cited as the university’s greatest cheerleader and strongest supporter,” his evaluation states, “and he is recognized as having built very strong relationships with faculty, students, alumni and friends of the university.”

The trustees gently dinged Gee for mistakes made during an NCAA investigation into the football program that damaged the university’s reputation. Still, he received a 2 percent raise — same as the faculty and staff — and a $143,179 bonus, which amounted to 17.5 percent of his base salary.

Kathleen McCutcheon, OSU vice president and chief human resources officer, said in a written statement: “Ohio State is a $5 billion enterprise, one of the nation’s largest and most complex universities, and we compete with the very best across the country for talented students, faculty, staff and research dollars. The university’s vision is to move from an excellent public higher education institution to the eminent model for what public higher education should be for the state and the nation.”

She noted that salaries are compared against pay at 29 private and 24 public institutions, and compensation for top leaders is targeted to be at or near the 75th percentile of this peer group.

Ohio State has more than 56,000 students and 35,000 staff members. Gee’s senior management team has been tasked with revamping the university’s finances, overseeing a $1 billion expansion of the medical center, kicking off a $2.5 billion multi-year fundraising campaign and raising the university’s profile across the country and around the globe.

In his comments to the Daily News, Gee pointed to two new financial deals — a long-term lease of OSU parking facilities in exchange for $483 million up front and a 100-year bond issue — as proof that his management team is on the cutting edge in generating revenue for Ohio State.

Together, the parking deal and bond issue account for nearly $1 billion in new revenue.

“If you take a look at the productivity of our institution in terms of the results of how well our people are doing, it’s extraordinary by any measure,” Gee said.

Benchmarking success

Comparing sprawling universities such as Ohio State even to peer institutions is difficult, but there are measurements that provide a glimpse at how OSU performs against itself and the institutions the school has identified as benchmarks.

One of the most widely-used instruments — the annual ranking of best colleges by US News & World Report — puts OSU at 56th among public and private four-year universities, up from 60th in 2006. Ranked just among public universities, Ohio State is 18th — up one position from 2006, when Holbrook was president.

Michigan, Wisconsin, Illinois and Penn State — all Big Ten schools like OSU — rank fourth, 10th and tied for 13th in the US News & World Report ranking.

On some measurements, Ohio State is clearly showing strides.

The average ACT scores of the incoming class climbed from 26.4 in 2006 to 28.1 in 2012. And the percentage of incoming freshmen who were in the top 10 percent of their high school class grew from 39 percent in 2006 to 55 percent in 2012.

OSU’s six-year graduation rate also improved, from 68 percent in 2006 to 80 percent in 2012. But even at 80 percent, OSU lags behind Michigan, Wisconsin, Illinois and Penn State.

The cost of attending Ohio State has continued to climb, but OSU officials note that the school’s average annual in-state tuition increase has been 2.7 percent since 2007, far less than the national public institution average of 6.5 percent. In several of those years, however, freezes imposed by Ohio General Assembly barred state colleges from raising tuition.

Incoming freshmen today pay $9,735 for in-state tuition and fees to attend school full-time on the main campus — about 20 percent more than students who started in 2006. Although tuition has increased, OSU notes that it boosted scholarship, grant and student employment funding by 21 percent during the Gee years, to $444 million for the 2011-12 school year.

Gee said Ohio State is “one of the most financially stable and one of the most financially forward institutions in the country” — moves that have allowed the university not only to be competitive in the recruitment of top talent, but “predatory,” attracting individuals other institutions want to keep.

“The performance of our university is very high right now,” he said. “Few can match it.”

Although university presidents are judged on a variety of criteria, a oft-used barometer is how much money they bring to the university, both in donations and research dollars.

Under Gee, OSU has poured money into research: Spending jumped 26 percent to $823 million last year, up from $653 million in 2006. But the investment isn’t reaping big money off patents and licensing, according to data from the Association of University Technology Managers. OSU’s licensing income totaled $1.4 million in 2011, which compares to $67 million at the University of Washington, $30 million at the University of Florida and $7 million at the University of Virginia.

UVA is notable because it spent far less on research than Ohio State, yet pulled in more licensing revenue.

OSU wants to improve on that record, and last year Gee recruited the man credited with building a top-tier commercialization program at the University of Utah to come to Ohio State. He didn’t come cheap. To become OSU’s vice president of technology commericalization, Brian Cummings was given a base salary of $365,000, 76 percent more than the administrator who held a similar position under Holbrook was paid.

Gee’s newest recruit, Michael Eicher, started Thursday, lured from Johns Hopkins University to oversee fundraising as Ohio State’s senior vice president for advancement. He was given a salary of $700,000 — with a guaranteed bonus of $300,000 in the first year, $20,000 in moving expenses and up to $30,000 in temporary housing.

The last person in that job, Jeff Kaplan, is expected to be placed in a different position. He was paid $493,000 in 2011.

OSU says Gee’s fundraising efforts have been the most successful in university history. Since July 1, 2007, OSU raised $1.28 billion compared with $1.04 billion in the previous five years under Holbrook. That increase was helped in part by the $2.5 billion fundraising campaign that was publicly launched in October but quietly kicked off in January 2009.

But Gee’s fundraising over the past three years is below average compared with nine universities OSU considers its benchmarks, according to data from the Council for Aid to Education. Those institutions averaged $247 million in fundraising receipts between 2009 and 2011, while OSU averaged $235.9 million.

The totals do not include $313 million that was pledged but not yet collected by OSU. However, pledged amounts were not tallied for the other schools either, so it is difficult to know if they are comparable.

For his review last year, Gee was judged by the 19-member university board of trustees, along with a cross-section of leaders who worked closely with him. Gee was told to improve strategic planning and internal and external communications, but got high marks on just about everything else, including securing the largest philanthropic gift in the school’s history.

OSU spokesman Jim Lynch said that Gee has pushed to find new funding in an era of stagnant government resources, while positioning Ohio State as “one of the thought leaders in higher education today.”

Alt of the Buckeye Institute said being a university president is a complex job that cannot be minimized. But he said the trustees should consider Ohio’s economy when deciding whether to reward Gee’s 2012 performance.

“(Ohio State’s) status as a state institution and the economic realities of the state and its residents — many of whom are struggling — have to be taken into account,” Alt said. “A lot of people have not seen a raise in a long time. It’s difficult to argue that Gee’s compensation should be immune from the economic realities that Ohio is facing.”

Staff writer Ken McCall contributed to this report.

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