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June 26, 2018

Executive Compensation at Yale

by Anne Paddock

The staggering cost of a college education perplexes many people who often wonder:  Why does a 4-year degree from a top private school cost about $300,000 (or about $70,000-$75,000 annually)? The answer is not as complicated as some people would lead you to believe.

In the most simplistic terms the answer is because you are supporting a huge education machine where, in the case of Yale, more than half of the total expenses ($2.2 billion of the $3.4 billion in expenses – not including depreciation) are compensation-related costs for the 28,739 employees in 2016 (an average of $75,000 each).  The next largest expense categories were for grants (primarily to domestic individuals for undergrad scholarships) which totaled $437 million, Fees for Services (primarily management related with no detail provided) of $186 million, office-related expenses (occupancy, IT, office and insurance) of $182 million, $170 million in supplies, and $145 million of other expenses (no detail provided).

In 2016, Yale reported $4.8 billion in revenue and $3.4 billion in expenses (not including $257 million in depreciation). The year before (2015), Yale reported $5.5 billion in revenue and $3.3 billion in expenses (not including $259 million in depreciation). Although the organization primarily relies on program service revenue (i.e. student income, medical service income, etc) that totaled $1.7 billion in 2016, Yale also relies on investment income which was $2 billion in 2016 (mostly from the gain on the sale of assets and investment income) and contributions (nearly $1 billion of which $448 million were government grants). The unspent portion of revenue – more than a billion in 2016 and $2 billion in 2015 – went to the net fund assets, a portion of which was offset by unrealized losses on investments.

The IRS Form 990 (2015 for the year beginning July 1, 2015 and ending June 30, 2016) reports 3,585 individuals received more than $100,000 in compensation with the 22 most highly compensated individuals listed below:

  • $4,238,803:  David F Swensen, Chief Investment Officer
  • $3,204,864:  Dean J Takahashi, Sr. Director of Investments
  • $1,790,227:  Timothy R Sullivan, Director of Investments
  • $1,530,354:  Khalid M Abbed, Chief Neurosurgery, Spine
  • $1,487,113:  Alan Forman, Director, Investments
  • $1,366,401:  Peter Salovey, Trustee and President
  • $1,171,984:  Masoud Azodi, Professor, OB/GYN
  • $1,099,606:  Peter G Shulam, Chair, Dept of Urology
  • $  917,138:   Robert J Alpern, Dean, School of Medicine
  • $  639,608:  Michael A Peel, VP for HR and Administration
  • $  627,138:  Benjamin Polak, Provost
  • $  610,539:  Bruce D Alexander, VP for New Haven and State Affairs
  • $  573,359:  Dorothy K Robinson, Former VP and General Counsel
  • $  568,149:  Alexander E Dreier, VP and General Counsel
  • $  556,311:  Linda K Lorimer, Former VP for Global and Strategy Initiative
  • $  551,009:  Joan E O’Neill, VP for Alumni Affairs and Development
  • $  545,706:  Shauna R King, VP for Finance and Business Operations
  • $  512,150:  Scott A Strobel, VP for West Campus Planning
  • $  454,276:  John H Bollier, AVP for Facilities
  • $  433,866:  Kimberly M Goff-Crews, Secretary and VP for Student Life
  • $  416,642:  Stephen C Murphy, VP for Finance and CFO
  • $  331,944:  Michael J Donoghue, Former VP for West Campus Planning

As illustrated above, the most highly compensated individuals work in investments managing the $26 billion in assets. Investment income and the sale of assets resulted in $2.1 billion in income (an 8% return) in income (although there was $1.7 in unrealized losses on investments which if recognized means the return was less than 2%. It is also important to note that in addition to the above management salaries, $55 million in investment fees were paid to outside firms.

Of the 22 individuals listed above, 17 are men (or 78%) while 5 are women. The top ten most highly compensated individuals are all men.

The Form 990 (2015) also reports Yale paid for first class and chartered travel and travel for companions. Of the $54 million spent on travel, it is unclear what portion was spent on first class and chartered travel.

Yale also provided housing allowances or residences for personal use, personal services (i.e. maid, chauffeur, chef), and tax indemnification and gross up payments. To read more about these benefits, see Schedule J, Part III of the Form 990.

Yale reported one housing loan in the amount of $100,000 to Scott Strobel, an officer. The current balance is $80,847.

$63,675 in scholarships were awarded to “interested persons” (usually relatives of staff, officers, or trustees).

The following five individuals/entities (“interested persons”) received:

  • $191,174:  Patricia Preisig, spouse of Robert Alpern, a key employee, for compensation as a professor of medicine
  • $152,892:  Stephanie Markovits, spouse of Benjamin Polak, an officer, for compensation as an English Professor
  • $108,195:  Ricecan Realty, LP, (trustee and family members own more than 35%), for income distribution
  • $102,619:  Wendy Sharp, spouse of Dean Takahashi, a key employee, for compensation as Lecturer of Music
  • $ 65,308:  Marta Moret, spouse of Peter Salovey, an officer, for compensation as an Associate

To read the IRS Form 990 (2015), click here.

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