President Takes One-Time Payout from Supplemental Retirement Plan

Each year, nonprofit organizations are required to file a Form 990 with the Internal Revenue Service, reporting, among other things, information about executive compensation. The fiscal year 2016 filing from Boston University reports that President Robert A. Brown’s annual base salary grew by approximately 3 percent, from $856,182 in fiscal 2015 to $883,574 in fiscal 2016.

The University also reports in Form 990 that Brown, who became president in 2005, received a one-time payout of $1,222,771, stemming from a supplemental retirement plan (SRP) put in place in 2010. Under the terms of that plan, every fiscal year from 2012 to 2016 the University set aside an amount equal to 30 percent of Brown’s annual salary, and those amounts were required to be distributed to him at the end of a five-year period.

Brown’s compensation for fiscal 2016 also included the fair market rental value of Sloane House, the president’s residence, and other miscellaneous items. When added to his base salary and SRP, the total reported amount is $2,631,771.

Todd Klipp, senior vice president, senior counsel, and secretary of the Board of Trustees, says a supplemental retirement plan such as the one provided to Brown is common among university presidents. Klipp says the annual SRP amounts had been set aside over each of the five years, not just out of the fiscal 2016 budget, and that, as required, BU had previously disclosed each of those set-asides in the Form 990 for the year in which the payments were accrued. IRS rules require the University to report the combined five-year total in the Form 990 for the year in which the SRP vests and the money is distributed. “Quite literally,” says Klipp, “we are required to report that compensation twice: each year as it accrues and again when it is paid out.”

The president’s compensation is determined annually by the Board of Trustees, which considers Brown’s performance as well as the compensation of executive leadership at comparable universities. The trustees are advised by the consultancy Willis Towers Watson, which provides compensation information for executives at 31 peer institutions, with particular focus on 14 schools in a “strategic indicator” peer group, including NYU, George Washington University, and Tufts University.

Steve Zide (LAW’86), chair of the trustees compensation committee, says Brown’s compensation, when compared to that of his peers, is “right in the middle of the pack,” while his performance is “close to the top.”

“What Bob has done is put in place a very deliberate benchmarking process for everything, from admissions to alumni gifts,” says Zide. “And the follow-through has been remarkable. As a result, the BU of today is in many important ways a different school from the BU of 2005. He has been a very successful leader.”

Kenneth Feld (Questrom’70), chair of the Board of Trustees, says Brown has done “a tremendous job moving the University forward.”

“Bob’s compensation is based largely on his accomplishments, many of which have resulted from his well-crafted strategic plan,” says Feld. “Under his leadership, BU has risen dramatically in university rankings, and it has more applicants for a place in the freshman class than ever. He has also led a successful effort to significantly increase research grants, which are up nearly 25 percent under his leadership.”