In a year fraught with news stories about higher education, the abrupt resignation of James Ryan, the President of the University of Virginia (UVA), stood out.
What prompted his resignation—conflict between the President’s more liberal view of where this historic university should be heading, and the presumed or actual opposition of the university’s Board of directors—was clear, but few financial details about his resignation were evident from the national media coverage. It was unclear, for instance, what, if any, compensation, benefits and/or severance package Ryan had to give up when he resigned (his contract apparently did, as with many College Presidents, include what we call “Retreat Rights”, which allowed him to take a sabbatical before returning to the faculty as a professor when he resigned as President).
As we routinely see in our capacity as attorneys for College and University Presidents and the Heads of Independent Schools, the contracts given to the chief executive of a University customarily provides that if the President either voluntarily resigns (or is fired for Cause, strictly defined as extremely serious malfeasance or dereliction of duty), the President walks away with nothing except his or her existing entitlements, such as unpaid back salary and vested pension rights.
By contrast, if the President of a school is dismissed by its governing board without Cause (the familiar euphemism is that “we decided to go in a different direction,” generally meaning that the President had not done anything wrong, but that the board thought that someone else would do a better or more cost-effective job), the contract provides for significant severance and health insurance reimbursement be paid to the departing President so as to soften the blow of losing the job. Indeed, often the President also retains all or a meaningful part of other emoluments (sabbaticals, retirement payments, etc.) which he or she would have earned if they had served out their full term of office.
Under this traditional scheme, a University President who abruptly announced that he was resigning of his own accord would usually not be entitled to severance or COBRA payments, sabbatical, bonuses or end-of-term expenses: basically, nothing after their base salary has been paid to them up to the date they stopped working.
Is that what happened in the wake of the UVA President’s resignation, or was he offered (or negotiated) some sort of “package” in order to agree to vacate the President’s office? The answer may be hidden in after-the-fact State or Federal filings, but it was certainly not clear to me in the national press accounts I read.
If the UVA President did in fact depart without anything meaningful by way of additional compensation, it seems unfair. Although UVA is a public university, there is little doubt that if he had been fired without Cause, he would have received a substantial severance and some of his other expenses.
Without trying to argue the particular partisan “rights and wrongs” of the UVA President’s position, we can agree that he did not engage in the sort of wrongdoing which would have provided Cause for his dismissal. He did not commit criminal, financial or sexual misconduct, or take off for an unannounced three-month paid vacation in Tahiti.
We have had clients who got so fed up with the extraordinary demands of being a College or University President that they walked away, telling us, “try to get me something, but if you can’t, it doesn’t matter; I am out of here.” But that was not the rationale of the UVA President, at least according to news reports. He foresaw a continuing conflict with his University’s governing Board in terms of the direction in which the University was headed, and decided there was little or no chance of reconciling these divergent views.
Could his contract have been written in such a way that this unresolvable conflict—let’s call it a “political stalemate”—would have triggered an agreed-on scenario in which the President could resign and still receive his full severance package?
Traditionally, this would require a clause in the President’s contract providing that such a situation constituted one of the specifically enumerated (and carefully defined) “Good Reasons” under which the CEO of the college or university could voluntarily resign without forfeiting his or her severance and other emoluments.
The possibility of this type of “political stalemate” as Good Reason will be discussed next month in the second half of my thoughts on this topic.
Lisa, Theresa and I wish our readers a happy, relaxing and peaceful end of summertime.
