University of California, Davis, Chancellor Linda P.B. Katehi addresses a wide range of issues while meeting with Sacramento Bee editors and reporters on Thursday, April 21, 2016, saying the school does not want to cover up well-documented mistakes but, rather, must work toward doing things better, including using social media for communication. Randall Benton The Sacramento Bee
University of California, Davis, Chancellor Linda P.B. Katehi addresses a wide range of issues while meeting with Sacramento Bee editors and reporters on Thursday, April 21, 2016, saying the school does not want to cover up well-documented mistakes but, rather, must work toward doing things better, including using social media for communication. Randall Benton The Sacramento Bee

The Public Eye

UC chancellors who resign routinely get big parachutes at executive-level pay

By Diana Lambert

dlambert@sacbee.com

August 20, 2017 03:55 AM

UPDATED August 21, 2017 08:11 AM

Within days of each other, UC Davis and UC Berkeley disclosed this summer their former chancellors would retain high salaries after having stepped down as embattled campus leaders.

At Davis, Linda P.B. Katehi will become an engineering professor in September at a salary of $318,200 over nine months, the rough equivalent of her executive pay when annualized. Down the highway, Berkeley’s Nicholas Dirks officially left his chancellor post this month and will get $434,000 during a transitional year with few duties.

The practice has become routine within the University of California system.

Over the past two decades, 12 of the last 22 UC chancellors have stepped down to take faculty jobs, often with a reduced workload and pay rivaling their former executive-level salaries, based on a Sacramento Bee review of pay data. Under a system policy, chancellors get a paid transitional year before returning to faculty; Katehi, for instance, received $424,360 for the past year after stepping down last August.

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The move to faculty, as well as the offer of a year of paid leave to ease the transition, has been written into UC chancellor offer letters for at least a dozen years and has been a policy for about 15 years, according to university officials.

UC spokeswoman Dianne Klein said these benefits help compensate for lower salaries UC chancellors receive compared to presidents of other universities. Transitional leave also allows former chancellors the opportunity to retool and conduct research in preparation for a return to faculty, she said.

Data on executive pay at U.S. public colleges, collected by the Chronicle of Higher Education, shows that UC chancellors ranked in the middle and lower third of overall compensation compared to other university leaders in 2015-16.

The practice of offering a sabbatical and a tenured faculty position to presidents or chancellors when they step down is common across the country, said James Finkelstein, professor emeritus at George Mason and an expert on university executive compensation.

“Historically, the two most common perks a president received were living in the university’s official residence and a car,” he said. “Over the years, as their roles evolved from the leader of an intellectual community to something more like the CEO of a corporation, governing boards started offering not only higher salaries but also more perks.”

Finkelstein said universities started giving perks such as memberships to country and athletic clubs. Later, they added lucrative bonus structures, deferred compensation programs, business travel, spousal stipends, cell phone and data allowances and supplemental insurance including life, health and disability.

“The irony is that in the private sector, many companies have been taking a hard look at perks and have determined that these have little to do with increasing CEO performance or shareholder value,” he said.

Katehi, 63, was chancellor at UC Davis for seven years before she resigned in 2016 after months of controversy and a four-month UC investigation. Katehi came under fire after she took a board seat with DeVry Education Group, which was under federal investigation for misleading students. A few months later, the Sacramento Bee reported she spent heavily on image-enhancing firms to improve her reputation and the university’s after the 2011 pepper-spraying of student protesters by campus police.

Katehi was given a year off at her chancellor’s salary so she could gear up for her new job on the faculty, according to the university.

Dirks, 66, chancellor at Berkeley from 2013 to 2017, announced in 2016 he would step down and then officially resigned earlier in August. Dirks was under fire for the way he handled sexual misconduct cases at the university – most notably one involving the law school dean – and for expenditures seen as lavish, such as a $700,000 fence around the chancellor’s house.

Dirks, who earned a salary of $531,900 when he stepped down, also will enjoy a year off at his chancellor’s salary. Because he didn’t work the five years required to be eligible for the perk, he will earn the pro-rated amount of $434,000, according to Janet Gilmore, a spokeswoman for UC Berkeley.

Though he made significantly more than Katehi as chancellor, he will get less pay as a professor. He will earn $237,300 per academic year when he returns to the university in the fall of 2018 as a history professor, Gilmore said.

UC Davis officials said they do not know what Katehi did during her leave to prepare for teaching and research, but the information should be available by December. The University of California requires any employee who takes a sabbatical to send a report outlining what they did that year within 90 days of returning to campus.

Former chancellors are typically required to return their sabbatical pay if they do not serve on the faculty for at least one year.

It is unclear how large Dirks’ teaching load will be, but Katehi is scheduled to teach one course each quarter this school year, starting with a one-unit graduate seminar that meets 50 minutes each Friday.

New UC Davis Chancellor Gary May said that a light teaching load is common for faculty members coming off leave and that engineering professors often teach fewer classes so they can do research, raise research funds and represent the university.

“Those things together fulfill a full-time load or obligation,” May said at a meeting this month with The Sacramento Bee editorial board.

He defended Katehi’s salary, saying it is in line with the pay of other engineering professors. “For a scholar of her stature and reputation and several hundred publications and 19 patents ... a salary of around $300,000 is not out of the realm of normalcy,” he said.

Assemblyman Phil Ting, D-San Francisco, said UC regents need to address policies that allow chancellors full pay the year after they step down and offer them faculty jobs with big checks.

“This policy is shocking considering that in 2009-10 we had to do devastating budget cuts,” Ting said. “There were huge tuition increases, and I’m shocked the regents didn’t address it when they were cutting everything else at the university.”

Katehi’s predecessor, Larry Vanderhoef, who retired in 2009 with a base salary of $315,000, also took a year off at full pay, according to university officials. He returned as a professor of plant science and agriculture in 2010 earning $185,000 for the nine-month academic year.

Vanderhoef taught three courses that year and two classes the next school year, but did no research, according to Kimberly Hale, UC Davis spokeswoman. “(He) did work on other programs benefiting the university such as student and faculty exchange programs,” she said.

Elsewhere in the system, Sung-Mo Kang took a similar route as Katehi and Dirks when he stepped down from the top job at UC Merced in 2010 and joined the electrical engineering faculty at UC Santa Cruz. He was paid his chancellor’s salary of $295,000 during a one-year leave. He joined the UC Santa Cruz faculty in 2012 at $222,000 for the nine-month academic year, which when annualized was slightly higher than his chancellor’s salary.

Kang currently earns $253,000 per academic year. He taught three courses in the spring of 2017.

At Berkeley, Robert J. Birgeneau, Dirks’ predecessor, commanded the longest paid leave after his retirement in 2013. After serving as chancellor for nine years, he was given two years off at his full chancellor’s salary of $436,800. Total cost of the leave: $873,600.

The extended leave was negotiated by UC regents at the time of his hire, Gilmore said. Birgeneau said regents offered him the extra year of leave to match his agreement with the University of Toronto, where he was previously president, to convince him to take the job at Berkeley, Gilmore relayed.

Birgeneau told university officials he worked full time, performing research, serving on committees, teaching in and out of the laboratory and doing public service on behalf of UC Berkeley during his two-year leave. He did not teach any regular courses during that time.

When Birgeneau returned to campus in June 2015 he drew a salary of $309,800 for a nine-month academic year as a professor of physics, Gilmore said. The professor will be paid $323,300 this academic year and will co-teach Physics 7B, a sophomore science and engineering physics course with 540 students. He also is conducting a graduate research seminar for physics students, Gilmore said.

Chancellors aren’t the only UC employees afforded these perks. Former UC President Mark Yudof was paid $546,000 in 2013-14, the year after he stepped down from his post, according to UC data. The pay for 2013-14 was to help him prepare to teach again, Yudof told a Sacramento Bee reporter in 2015.

Yudof resigned to be a law professor at UC Berkeley, where he co-taught one class each semester during the 2014-15 school year before retiring.

Diana Lambert: 916-321-1090, @dianalambert