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No Tenure, No Contract: The Importance of Tenure and “Retreat Rights” for College and University Presidents — Part 2

In Part 1 of this topic, I described the importance which we, as executive employment attorneys working in higher education, place on tenure and “Retreat Rights” as an essential term and condition of the contract of a college or university president.

Accordingly, it is a key element of almost all college president contract negotiations.

The difficulty, however, is that academic tenure is a status which cannot be unilaterally conferred on a college president by the Board of Trustees. Tenure customarily is awarded only by the faculty, acting through a faculty committee and pursuant to the faculty rules and regulations of the institution. This makes tenure a unique term and condition of the president’s contract. The Board of Trustees is vested with the power to hire (and fire) the president of its college or university, and can set and adjust all of the other terms of the president’s contract (e.g., the amount of salary and other benefits; the definition of Cause for termination; the amount of severance to be paid to the president if he or she is terminated without Cause) but the same is not true of tenure. So how can the Board sign a contract giving something which it has no power to give?

Further, there is a practical wrinkle to this problem, one familiar to all executive compensation lawyers who work in education, and that is the frequent disconnect between the Board’s timing and that of the faculty.

Here is an example. Imagine the situation of the Board of Trustees of a college or university who has spent a year (or more) engaged in an extensive (and expensive) formal search for a new president, the current president having already announced that he or she will be stepping down at the end of the academic year. The search has been successful, and on September 1st of the academic year which started on July 1st, the Board of Trustees has voted to appoint its preferred candidate, Dr. I.M. Leaderbot.

Everyone on the Board, as well as the search firm which produced the winning candidate, feels anxious and excited. Let’s also assume that the proposed new president’s contract negotiations have, in every other respect, proceeded smoothly, and that the president’s executive employment attorney and the attorney for the Board have reached agreement on every other term embodied in the contract.

For a variety of reasons, some of them legitimate and some more questionable, the Board is straining at the bit to announce its hiring of a new president to the school’s different constituencies, alumni, donors, parents, students, and both the local and larger educational community.

But – and it is a big but – as the new president’s executive employment attorneys, we are insisting on the inclusion in the contract of a term and condition guaranteeing our client tenure and specified retreat rights before Dr. Leaderbot signs the contract, even though – because the academic year is just starting – the faculty committee which actually awards tenure is not scheduled to meet and vote on whether to approve the recommendation of tenure for the new president until late October, almost two months later. Can the public announcement be delayed that long? Unlikely.

The school’s lawyer argues that the grant of tenure to the new president is really only pro forma. Dr. Leaderbot is a respected academic who already has tenure at his or her current institution (and will be giving it up by departing for the new job).

But good attorneys are mistrustful of probabilities and wary of “almost a sure thing.” Representing the new president, we insist – as we have in a number of actual situations – no tenure, no new president. How to handle this impasse, which may or may not be “only a technical problem”?

One answer is to insert a clause in the new president’s contract which makes tenure an immutable term and condition of the contract and the new president’s employment, and should the faculty inexplicably decline to grant tenure, Leaderbot’s contract is null, void and of no effect, and Leaderbot stays put. We have been in a number of situations which have adopted this solution.

Of course, it is not a perfect human solution, even if it is a good legal solution. In the highly unlikely event that the new president’s tenure is not approved by the faculty (a situation which has not, thankfully, happened in our experience), there will be some discomfort and embarrassment to be shared by the school, the Board and possibly Dr. Leaderbot. This embarrassment, however, is far preferable to committing a valued senior educator to the difficult job of being a college or university president under a contract from which a fundamental protection is lacking.

That is one of the reasons why college and university presidents hire executive employment attorneys with experience.

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.