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No Tenure, No Contract: The Importance of Tenure and “Retreat Rights” for College and University Presidents — Part 1

Executive employment lawyers who practice in the area of higher education understand from experience that there are a number of sections in the contract of a college or university president which would not appear in the contract of an executive in the “for-profit” sector, such as an investment banker or media executive.

A prime example of the special nature of academic contracts comes into play when a senior academic, a dean or provost, is hired to be the new president of a university or college. One of the important terms and conditions of the new leader’s employment is a grant of academic tenure. Of course, we have run into instances of smaller, largely regional or community colleges, which do not grant tenure to any of their faculty, let alone their administrators, but these schools remain in the minority of situations which we encounter as executive employment attorneys in education. The vast majority of colleges and universities still award tenure to their senior, and thereby permanent, faculty. At such schools, it is important that the incoming president (who often although not always has tenure at their current school) be given tenure in the new institution as well.

Along with tenure comes so-called “Retreat Rights” which we also carefully negotiate on behalf of our clients. These rights are contained in the section of the presidential contract which speaks about tenure, and they specify the salary to which our client will be entitled if he or she “retreats” to a faculty position after having served as president.

Such a change in job title within a single educational institution is not a frequent occurrence, but it does happen and for different reasons. A president may weary of the top administrative job, with all of its stresses and difficulties, and decide to “retreat” (a more accurate term might be “escape”) to the faculty, with the less onerous duties which such a teaching position entails.

Or, even a very good and successful president may decide that although they like and enjoy the institution, they do not particularly enjoy being an administrator, feeling that they miss teaching or research scholarship more than they had previously imagined.

Also, there are instances where the president is terminated without Cause, a situation which is not necessarily a reflection on the president’s performance, but merely the result of a restless Board of Trustees whose priorities have changed.

In all of these situations, having tenure and “retreat rights,” protect presidents from finding themselves abruptly and completely unemployed. Further, having the specifics of the president’s “retreat rights” embodied by us in the presidential contract means that his or her new salary as a faculty member has already been agreed on, so there need be no contentious negotiation over what the now ex-president will be paid when they assume faculty status. By way of example, “retreat rights” generally provide that the ex-president will receive the higher of the highest current faculty salary or 40% to 60% of the presidential salary. (This does not address, much less answer, the question of the interplay between “retreat rights,” any sabbatical entitlements provided by the contract, and the agreed-on severance to be paid to a president who is terminated without Cause; that complex issue is another and separate concern of the executive employment attorney who represents the college or university president.)

Finally, tenure is also an important protection for the college or university president in another regard. Deciding to terminate a president without Cause because the governing Board of the institution “wants to go in a different direction,” becomes a harder decision for a Board which may not be unanimous in its members’ views as to the wisdom of such a significant and public step. It is not at all uncommon that the sitting president has his or her continuing supporters on the Board.

Accordingly – and unlike the CEO of a bank who, when they are fired, will be fully removed and detached from any connection with the bank – if the ex-president of a college or university has the contractual right to remain at the institution in a faculty position, the Board may think extra hard about the fallout from removing the president without Cause.

From the foregoing, it should be clear why, as executive employment lawyers in higher education, we customarily insist on the provision of tenure and “retreat rights” for the incoming president who is our client.

But, to paraphrase Hamlet, “Ay, here’s the rub.” The award and grant of academic tenure is traditionally a zealously and jealously guarded prerogative of the faculty, not the administration, and certainly not the Board of Trustees who is responsible for negotiating and approving the terms and conditions of the prospective president’s contract. So how can the Board promise, much less agree to, the details of something (tenure) which is not within its control? That will be the subject of the next installment on this topic.

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.