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A Better Year Ahead for College and University Presidents

Our executive employment law practice gave us a vantage point from which to view the effects of the pandemic on our nation’s leaders in higher education, the presidents of American colleges and universities.

It was not a pretty picture.

Carefully formulated budgets, particularly for financially pressed institutions, had to be dramatically revised downward or discarded entirely. The health of students and faculty had to be weighed in the balance against financial realities at a time when reliable scientific information about the projected extent and danger of the COVID-19 virus was either in short supply or a matter of internal conflict and professional controversy. Fairly or not, the proverbial buck always stopped on the president’s desk.

Later in the year, with renewed calls for social justice in the country came student unrest and pressure for re-examination of the actions and consciousness of the institutions themselves in order to model good practices for an increasingly diverse society. Here, too, leadership bore the brunt of varied opinions and strategies.

In practical terms, the effects of the pandemic on the careers of university and college presidents were significant. In order to show solidarity with the necessary financial constraints, often imposed across the board on faculty and programs, many presidents took a significant, often voluntary, pay cut at a time when they were working longer hours, if possible, than their customary 24/7 non-pandemic commitments. Almost any move they made, whether to tighten the school’s purse strings, choose among the pros and cons of distanced versus in-person learning, or make unwanted decisions about people and programs, came under fierce criticism from one or more of the president’s constituencies.

Some boards of trustees, in my judgment mostly frustrated by how little they could do to control the effects of the pandemic, decided that the one thing they actually could do was “fire the manager” because the team appeared to be losing. As a result, a number of otherwise excellent college and university presidents lost their jobs. At the same time, in a sort of funhouse mirror inversion of the wave of involuntary departures, other presidents, no matter how well compensated and protected, decided they had suffered enough from an untenably demanding job and removed themselves by arranging for their own early departures. There were months when nothing seemed to make much sense except to try to make it to the next day or the next unpleasant decision with a minimal amount of damage.

Hopefully, the year to come will see some return to, if not normality even with all the new vaccines, at least a greater sense of stability in the C-Suite of colleges and universities, as everyone tries to figure out both the long-term effects of the pandemic and what the “new normal” is going to look like and require in the immediate future.

What are the lessons that executive employment attorneys concerned with clients in higher education should take away from what college and university presidents have gone through in the past year?

Most importantly, never has the value of having a good employment agreement been so clear. A good executive employment contract for a college or university president contains a host of necessary protections. Some of these protections, such as a tight definition of “Cause” for termination and a provision for adequate severance compensation if the president is terminated without Cause, are common to executive employment agreements in all the industry sectors we serve. Other protections, such as so-called Retreat Rights based upon tenure or other considerations, are specific to higher education. College and university presidents must work with knowledgeable higher education attorneys and pay sufficient attention to obtaining the best possible agreement when they first take their jobs. Without such an agreement, it will become far more difficult to negotiate an optimal exit package.

Frequently Asked Questions (FAQs)

1.     Q.     When a president is terminated, why does it make such a difference to have a good, fully protective contract?

A.     The president’s contract is the beginning point for any discussion of an exit package. If it is not a particularly good contract to begin with, it also may be the end of any meaningful discussion if the board is feeling not particularly generous.

2.     Q.     Can a good presidential contract really make that much of a substantial difference?

A.     Absolutely. Although you might think that any board of trustees of a reputable college or university would have every reason to want a president who departs without Cause to feel that they were treated fairly, human nature is such that emotions rather than reason often rule the board’s actions. This is why the president’s best protection is a strong and thorough agreement, carefully negotiated in detail at the time the president is hired and when the school is excited and optimistic about his or her engagement.

3.     Q.     If, because of the pandemic, the president has taken a salary cut, how should that be handled, now and in the future?

A.     There are a number of ways to handle this situation, ranging from a written schedule documenting the timing of when any such cut should be restored to its pre-pandemic level, to an agreement that any voluntary reduction of pay will, at the conclusion of the exigency which triggered the president’s sacrifice, be both made up and, hopefully, rewarded by future raises, performance-based bonuses or contract extensions. No president should agree to a salary reduction without receiving a writing making it clear that the reduction is temporary; that it occurred in response to a perceived emergency at the college or university; that it was a concession without prejudice on the president’s part; and that it should not be deemed to change or vary the president’s contractual compensation or the other terms of the president’s agreement. Finally, the president who is considering volunteering for such a reduction should be certain to ascertain that the board actually cares about the president’s altruism, and that the reduction is both necessary and will match a specific need on the part of the institution.

About the Author

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George Birnbaum

Since 1980, sophisticated business people have relied on George to apply the meticulous preparation, attention to detail, and devotion to his clients he learned from fabled trial lawyer Louis Nizer. A graduate of Harvard College and Harvard Law School, George has over 35 years of distinguished deal-making, litigation, mediation and arbitration experience which he has used to negotiate high-stakes agreements for senior executives and select business clients throughout the United States.