The University System of Maryland will stop providing bonuses to the system chancellor, school officials said Thursday, after lawmakers sharply questioned a $75,000 bonus awarded during a closed-door meeting this spring.
State lawmakers convened a joint hearing to scrutinize the compensation of Chancellor Robert L. Caret, who received the bonus just one year after he was hired at an annual salary of $600,000.
“Why is the chancellor getting all this increase when we are raising tuitions? It’s really hard to justify this to students,” Sen. Nancy J. King (D-Montgomery) said at the hearing.
James T. Brady, head of the system’s Board of Regents, said the bonus was a way of keeping Caret’s take-home pay on par with what he received in his previous job, leading the smaller University of Massachusetts system. There, Caret was one of the nation’s highest-paid chancellors, with more than $700,000 in total compensation.
Brady said he’ll push to strip performance bonuses from Caret’s contract. He also told lawmakers that the university system will start publicly announcing raises given to chancellors and campus presidents.
The full Board of Regents will vote on those changes in September.
In an interview after the hearing, Brady said that the board may increase Caret’s base salary so that the elimination of bonuses doesn’t reduce his overall compensation. He also said the state of Maryland struck a good deal in hiring Caret, who is being paid about as much as he was to lead a much smaller system.
“It would be nice to get the next chancellor for $100,000, but that person doesn’t exist,” Brady said.
Caret’s contract includes an annual 5 percent cost-of-living and merit increase and a performance bonus of up to 15 percent of his salary (up to $90,000 for his first year). It also includes yearly payments of $53,000 for annuities and $15,000 for life insurance.
And there are other perks, too, which were also available to his predecessor: free housing at the Hidden Waters mansion, a personal driver and travel reimbursements for his wife to accompany him on university business.
Privately funded foundations affiliated with USM paid $5,000 for Caret’s golf course and club memberships, according to documents provided to lawmakers. At the hearing, King said members of the legislature had been told that individual campuses were asked to cover those costs. University officials denied that.
Lawmakers criticized Caret’s arrangement as essentially masking the true cost of the chancellor’s base salary by filling it up with perks and practically guaranteeing a bonus.
Brady told lawmakers that the bonus was not assured, citing the chancellor’s work meeting with people across the state to promote the university and helping shepherd legislation allowing the University of Maryland at Baltimore to join forces with the flagship campus in College Park.
“He took on this role with all of the vigor and the energy we were looking for,” Brady said.
Caret defended his compensation to reporters after the hearing.
“Do I feel that after 21 years as a campus or system head that I deserve that? Yes,” said Caret, a former Towson University president. “I don’t apologize for that, but I am sensitive to it.”
Legislators didn’t make a fuss when Caret’s predecessor, William E. Kirwan, received a $500,000 bonus after he stepped down last summer. At the time he left, Kirwan’s annual salary was $573,000.
House Speaker Michael E. Busch (D-Anne Arundel) says the difference is that Kirwan had a successful, 13-year tenure leading the 12-institution system, while Caret had little track record to justify his bonus.
“It seems to be this corporate mind-set that regardless of what happens, you get a bonus on top of a very, very attractive compensation,” said Busch. He welcomed the regents’ move to stop awarding bonuses.
Maryland froze tuition rates at its public universities from 2006 to 2010 and since then has had some of the nation’s smallest tuition increases, usually about 3 percent a year. The bump for in-state tuition this school year was 2 percent.
The Chronicle of Higher Education, which publishes an annual compensation survey, says the typical public-college leader made $431,000 in fiscal year 2015. Big bonuses drove total compensation above $1 million for four university leaders, including the chancellor of the University of Houston system, Renu Khator, whose $1.3 million pay included a $200,000 bonus.
Raymond D. Cotton, a lawyer who handles contract negotiations for university boards and presidents, said Caret’s compensation package is actually a bit modest, considering the size and complexity of Maryland’s system, which has nearly 40,000 employees and an operating budget of $5.1 billion.
“The taxpayers of Maryland are getting one hell of a bargain,” Cotton said. “The chancellor, in agreement with the board, is setting the course for the entire system. . . . There is an awful lot of responsibility. The relevant question legislators should ask is how much money altogether is the system bringing to the state of Maryland?”