The revelation that Clark Atlanta University paid its former president more than $1 million the year he retired shocked and angered faculty and many alumni, but the chairwoman of the university's board of trustees says it was a good deal for the financially struggling school.
In his final year at Clark Atlanta, 2008, Walter Broadnax was among the 30 highest-paid private-college presidents in America, according to the annual salary study by the Chronicle of Higher Education, which was released last week. His total payout that year came to $1,158,537.
"The contractual payout amount was not out of line with the job we were asking Dr. Broadnax to do," board chairwoman Juanita Baranco said. "He came in and literally transformed the university, so the contract was a sound business judgment when we entered into it in 2002.. I do want to emphasize that this was a unique situation."
But an expert on compensation for college presidents said the deal appears to have been extraordinarily generous, and Clark Atlanta faculty say they've been unable find presidents at comparable schools who made comparable money.
Baranco said Broadnax was hired to turn around the college's finances -- expenses had outstripped revenue for a couple of years. She said the compensation package was standard in 2002 for college presidents at comparable institutions.
Raymond D. Cotton, a Washington attorney who has represented more than 200 colleges and universities and is an expert on compensation issues in higher education, said turnaround situations often merit higher pay. But he said Broadnax's package still appeared extraordinarily generous -- especially at a school with financial problems -- and out of line with comparable schools.
He also said Broadnax's annual pay and deferred compensation, which usually totaled more than $400,000 a year, appeared to be at the top if not above the pay range at comparable institutions.
“I negotiate a lot of these contracts and in my experience those numbers are very, very high for such a small school," said Cotton, a partner in the Washington office of the Mintz Levin law firm who has worked for Morehouse School of Medicine and the University System of Georgia. "If the chairwoman says that was the norm in 2002, I would just like her to point to a few institutions because I don't think I could find them."
Cotton said the million-dollar payout at the end of Broadnax's tenure could put the college at risk of an IRS audit.
“If the pay is way above what the peer institutions pay, the IRS can go after that money, get it back from the executive and fine the trustees," he said. "The government wants to make sure it has been spent appropriately."
Brian Vogel, a compensation expert on nonprofits at Quatt Associates in Washington, said that salaries or one-year payments of more than $1 million can trigger an audit by the IRS. He said such a payment on an president's exit may be explainable because it can combine annual salary, deferred compensation and other performance and retention bonuses in the contract.
"That is a big lump sum of money," he said. “[But] I have seen big payouts that when you look into them were perfectly legitimate.”
Diane Plummer, a psychology professor who chaired the faculty senate when it voted no-confidence in Broadnax in 2007, said trustees have always claimed the former president's salary was reflective of peer institutions.
"They could not say which ones," she said. "When we investigated we found that wasn't the case. ... His really stood out.”
For instance, William Harvey, president of Hampton University in Virginia,made about $231,000 in salary and $42,000 in deferred compensation in fiscal 2002 -- the year Broadnax was hired -- and $262,000 and $56,000 in fiscal 2008, Broadnax's final year at the school. Morehouse College President Robert Franklin made about $278,500 with $68,000 in deferred compensation in fiscal 2008 .
Broadnax was paid a comparable salary to Harvey in 2002, $229,000 and $7,000 in deferred compensation. But that jumped to $314,000 with $78,000 in deferred compensation in 2003. It was $355,000 and $88,000 in 2007, the year of the faculty no-confidence vote in his leadership.
Thomas Cole Jr., the president Broadnax replaced, made $172,500 in salary and $8,500 in deferred compensation in his last full year at the university.
Baranco said Broadnax negotiated a detailed contract that provided him with a strong compensation and retirement package if he met his contractual obligations. She also noted Cole's retirement package entitled him to six-figure annual payments on a sliding scale as president emeritus, going from $160,000 in fiscal 2002 and 2003 to $108,000 in 2008.
Broadnax's retirement package was structured as a lump sum, she said.
“That lump sum payment –which is a large sum – if you were to extrapolate it out as a normal retirement income over X number of years, it would not have been quite as shocking," Baranco said.
She said the board did not enter into such a detailed contract with the current president, Carlton Brown, and did not provide him with a retirement package.
Brown's compensation for fiscal 2008, his first year as president, according to the college's tax filings, was about $297,000 and with no mention of deferred compensation, although it did include about $20,500 in non-taxable benefits.
Brown, the former president of Savannah State University, came on board as provost the year of the faculty vote on Broadnax. While faculty members contend that the board forced Broadnax to retire, Baranco said that was not the case.
Broadnax, she said, knew it was time for him to leave. The school was on a sounder financial footing, it had an improved bond rating, and Broadnax hired Brown to put him in a position to be strong contender to succeed him as president, Baranco said.
“My sense on the part of the board is that there were some tough decision that had to be made during the Broadnax years and Dr. Broadnax did a fine job at understanding the financial situation and making some tough choices," she said. "I think he was the man for that time and we have a new president who is the man for this time.”
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