Mercer, a global consulting leader in talent, health, retirement, and investments, and Witt/Kieffer, a leading executive search firm, announced the results of the 2014/2015 Severance Survey for Presidents of Non-Profit Colleges and Universities. The report summarizes severance benefit practices for Presidents of 63 colleges and universities across the United States and marks one of the few comprehensive efforts to capture severance data in academic institutions.
“Compensation for the President of academic institutions is a topic that already attracts considerable attention,” says Karen Hutcheson, a partner with Mercer’s Talent business specializing in Higher Education. “While there is an abundance of data on cash compensation, we were surprised to find so little focusing on severance, and no studies devoted solely to severance packages in colleges and universities.”
“In recent years, competition has intensified for Presidential candidates,” says Lucy Leske, managing partner of Witt/Kieffer’s Education practice and co-lead of the survey. “As universities consider candidates from outside the academy, executive compensation and contract terms have become more complex to mirror packages found in a variety of industries.”
The survey found that severance benefits are most commonly triggered by involuntary termination without cause. Among institutions that provide severance, the median severance period for the President is 12 months. Less than 10% of respondents continue incentive compensation during the severance period, while approximately 65% continue benefits. The most common benefits to be continued include: health, dental, vision, and life insurance.
Top survey findings include:
· Of the 60% of respondents that have a formal severance agreement with the President, the vast majority outline the terms of the severance benefit in the employment contract.
· Less than 20% of respondents provide service-based severance benefits.
· Approximately 89% of respondents continue base salary only.
· More than 80% of responding institutions provide either housing or a housing allowance to their President while in office. Upon termination, the housing often continues for an agreed upon time.
· Less than 30% of Presidents’ severance agreements provide for mitigation (i.e. if the President gains employment during the severance period benefits end or are reduced).
Methodology: Witt/Kieffer and Mercer surveyed 63 higher education institutions across the United States. To ensure confidentiality of data, a minimum number of observations was required for variable statistics to be provided. Four institutions reported at least four observations on a variable before the median and mean were shared.
Information about Witt/Kieffer:
Witt/Kieffer is the nation’s preeminent executive search firm supporting organizations improving the quality of life, including those in healthcare, education, academic medicine, life sciences, sports, and the not-for-profit sector. It also serves clients through its Board Services and Leadership Solutions practices, which offer services that further strengthen client enterprises. For more information, please visit WittKieffer.com. Follow the firm on Twitter and Facebook, and connect on LinkedIn.
Information about Mercer:
Mercer’s more than 20,000 employees are based in more than 40 countries and the firm operates in over 130 countries. Mercer is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global professional services firm offering clients advice and solutions in the areas of risk, strategy and people. With 57,000 employees worldwide and annual revenue exceeding $13 billion, Marsh & McLennan Companies is also the parent company of Marsh, a leader in insurance broking and risk management; Guy Carpenter, a leader in providing risk and reinsurance intermediary services; and Oliver Wyman, a leader in management consulting. For more information, visit http://www.mercer.com/. Follow Mercer on Twitter @Mercer.
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