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Penn State’s former president to receive $3.3 million in compensation for 2011

Published: Thursday, Nov. 29, 2012 9:42 a.m. CDT

(MCT) — PHILADELPHIA—Pennsylvania State University’s former president, Graham B. Spanier, will receive nearly $3.3 million in compensation for 2011, including a $1.2 million severance payment following his forced resignation that year, the university said Wednesday.

Officials said the severance payment and $1.24 million in deferred compensation earned over his 16 years as president were required under Spanier’s 2010 employment agreement.

Spanier was forced out a little more than a year ago following child-sex-abuse charges against Jerry Sandusky, a former assistant football coach who has since been sentenced to at least 30 years in prison. Once one of the most highly regarded university presidents in the nation, Spanier this month was charged with perjury, conspiracy, and endangering the welfare of children.

University spokesman David LaTorre wrote in an e-mail that Spanier was “terminated without cause” and that the university was legally bound to compensate him according to the contract.

That agreement, which extended Spanier’s contract to 2015, was announced in June 2010 — months after the first subpoenas in the Sandusky investigation had been issued to Penn State. Spanier was aware of the probe, according to information in an investigative report by former FBI Director Louis Freeh.

Spanier’s attorney, Peter Vaira, declined to comment. The university declined to provide the contract document.

Penn State would have been required to release the compensation terms as part of its annual public disclosure statement in May but chose to do so earlier in the interest of being more open, officials said.

Some immediately questioned the payout.

“I can’t imagine a justification for a severance payout to a man under indictment for gross misconduct during his tenure,” said Tom Kline, a Philadelphia lawyer who represents the 26-year-old Sandusky victim identified in court documents as Victim 5. “It is offensive on its face. We expected by the end of the year compensation to those who were wronged, not compensation to the wrongdoers.”

The university is settling civil claims by victims but has not announced any agreements.

Payouts to university presidents are not atypical, said Barmak Nassirian, a higher education consultant formerly with the American Association of Collegiate Registrars and Admissions Officers.

Donald E. Ross, former president of Lynn University in Florida, left in June 2006 with $5.7 million. This year, the Georgia Board of Regents announced that Michael Adams would retire as president of the University of Georgia and receive a $2.7 million payout over five years.

Michael D. McKinney retired from Texas A&M University in the summer of 2011 with nearly $2 million in compensation that year, including $683,000 in terminal pay, according to the Chronicle of Higher Education.

Locally, James P. Gallagher in 2006 received $2.6 million when he stepped down from the presidency of Philadelphia University. That included $2.2 million in deferred compensation accrued over five years.

Presidents are not the only ones with substantial payouts. Joe Paterno, Penn State’s legendary football coach who also was forced out by the Sandusky case, received a final compensation package worth $5.5 million.

Nassirian said it would be unfair not to give Spanier what he is legally entitled to get. But the practice of granting such payouts ought to be reconsidered, he said.

“It strikes me as another illustration of complacency and governance-on-autopilot at so many institutions,” he said. “Egregious practices gradually take hold and become normal until the stress of a crisis forces a reexamination of everything, including unrelated issues.

“Multimillion-dollar compensation packages for college presidents ought to be the subject of significant debate and possibly some indignation at all times, not just when one of them happens to be caught up in a scandal.”

Under the agreement, the deferred compensation — $860,637 after tax withholding — will be paid to Spanier in June 2017, the university said.

The full $3.25 million will appear as Spanier’s compensation for 2011 in the public disclosure forms.

Also included in that amount are Spanier’s $700,000 annual salary and $82,557 in taxable benefits.

Prosecutors allege Spanier worked with Penn State’s former athletic director, Tim Curley, and ex-vice president Gary Schultz to cover up allegations against Sandusky dating back to 1998.

All three have vowed to fight the charges in court, and this week sought to delay preliminary hearings scheduled for Dec. 13.

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