Executive Compensation and Perks at Liberty University

Liberty University was originally established as Lynchburg Baptist College in 1971 but changed its name to Liberty University (Liberty) in 1985, the same year the school was accredited. Described as an evangelical institution of higher education, Liberty has about 15,000 students on campus but more than 90,000 enrolled in on-line classes, making the school one of the largest Christian universities in the country.

Liberty has 17 colleges including a school of medicine (osteopath) and law, along with 20 Division 1 sports.  The annual cost of tuition, room, and board for undergraduates is about $35,000, or about $140,000 for a 4-year degree – a relative bargain compared to many private universities whose cost is often $75,000 annually or $300,000 for a 4-year degree.

In 2017, Liberty reported total revenue of $1.111 billion, of which $1.037 million (93% of revenue) came from program services (tuition, room and board, fees, and medical residency program). The remaining revenue primarily came from contributions, gains on the sale of assets, iand nvestment income. Expenses totaled $877 million ($43 million in depreciation) including $228 million in grants (mostly scholarships or partial scholarships).

The $234 million in unspent revenue along with $50 million in net unrealized gains on investments allowed net assets (often referred to as the endowment) to increase from $1.815 billion at the beginning of the year to $2.104 billion at year-end. The question that arises is: How is Liberty able to provide an accredited college education for less than half the cost of most private universities and still provide $228 million in grants? Let’s look at compensation, which generally eats up about half of total revenue at colleges and universities.

Liberty employed 12,755 individuals (in 2017) who were compensated $356 million (32% of total revenue), which equates to an average compensation of $27,900 (compared to $40,100 at Villanova, $41,700 at Boston College, $28,800 at Marquette, $37,900 at DePaul, $45,800 at Georgetown, and $28,800 at Saint Leo). So, Liberty appears to pay lower salaries and consequently have lower total compensation costs.

361 individuals received more than $100,000 in compensation with the 23 most highly compensated individuals listed below:

• $1,018,527:  Jerry Falwell, Chancellor/President
• $  947,281:  Turner Gill, Head Coach Football
• $  643,701:  Ritchie McKay, Head Coach Men’s Basketball
• $  402,896:  Randall Smith, EVP and COO
• $  380,255:  Ronnie Martin, Dean College of Osteopathic Medicine
• $  378,853:  David Nasser, SVP Spiritual Development
• $  370,818:  Jeff Barber, Director of Athletics
• $  320,592:  Laura Wallace, EVP, Human Resources
• $  311,927:   Chris Johnson, EVP Residential Enrollment
• $  301,156:  Brian Faulkner, Dean School of Law
• $  299,198:  Carey Green, Head Coach Women’s Basketball
• $  290,469:  Ron Hawkins, Provost and Chief Academic Officer
• $  286,763:  Dale Layer, Former employee
• $  280,458:  Don Moon, CFO/VP Investment Management
• $  279,547:  Ronald Kennedy, EVP Online Enrollment
• $  275,843:  David Corry, General Counsel/Secretary
• $  270,318:  Charles Spence, SVP Campus Facilities and Transportation
• $  257,768:  Robert Ritz, SVP University Financial Services
• $  238,752:  Samuel Beaumont, SVP Auxiliary Services
• $  222,725:  Alan Askew, VP Major Construction
• $  218,736:  Ben Gutierrez, Co-Provost/VP Academic Affairs
• $  211,827:  John Gauger, CIO/VP Analytics
• $  209,323:  Lawrence Hine, SVP Student Affairs

22 out of the 23 (96%) of the most highly compensated individuals are male. The lone female is predictably in Human Resources.  The question: Why doesn’t Liberty have more females in the most highly compensated positions?

The IRS 990 for the year ending June 30, 2017 also reports Liberty paid for first class or charter travel and travel for companions. To read about the detail of these expenses, go to Schedule J, Part III, Supplemental Information (link below).

Schedule L (Transactions with Interested Persons) discloses the following information:

• A $750,000 loan (that was not approved by the Board or committee) to a substantial contributor for construction management at Liberty was made. The balance due is $457,947.
• $424,825 in education grants were made to dependents of Board members, officers, and key employees.
• Liberty paid $22 million to a related party, Thomas Road Baptist Church for school buildings and land.
• Bernie Beckles, wife of a Board member was paid $18,494 in compensation.
• Laura Falwell, daughter-in-law of Board member and officer was paid $56,915 in compensation.
• Jennifer Kennedy, wife of a key employee was paid $51,887 in compensation.
• Brandon Elrod, son-in-law of a key employee was paid $39,341 in compensation.
• Sarah Falwell, daughter-in-law of Board member and officer was paid $56,840 in compensation.
• JF Management, owned by son of Board member and officer was paid $50,117 in compensation.
• Wesley Falwell, son of Board member and officer was paid $51,463 in compensation.
• Jessica Smith, daughter of a key employee was paid $23,986 in compensation.
• Jerry Falwell, III, son of Board member and officer was compensated $119,113.
• Jonathan Wallace, son of a key employee was compensated $79,166.
• Yoshua Spence, son of a key employee was compensated $42,638.
• Kathleen Spence, wife of a key employee was compensated $54,456.
• Nastaran Morgan, sister of a key employee was paid $44,774 in compensation.
• Ryan D Rush, son-in-law of a Board member was paid $34,556 in compensation.
• Scott Hawkins, son of an officer was paid $208,681 in compensation.
• Tammy Gutierrez, wife of an officer was paid $81,060 in compensation.
• Vincent Tickle, son-in-law of a Board member was paid $77,498 in compensation.
• Virginia Dow, sister-in-law of a key employee was paid $97,157 in compensation.
• Donna Barber, wife of a key employee was paid $10,092 in compensation.
• Elmer Towns, a co-founder was paid $122,257 in compensation.
• Redfinch Solutions, owned by a key employee was paid $123,950 for services, rent received.
• A substantial contributor was paid $504,849 for fuel and payments for advertising.
• A substantial contributor was paid $25,003,223 for construction services, payment received for suite rental and ad.
• A substantial contributor was paid $4,742,601 for investment management services.
• A substantial contributor was paid $145,038,503 for construction services, payment received for rent and interest.
• A substantial contributor was paid $105,698 for heating and air installation.
• A substantial contributor was paid $44,892 for rent and advertising.

Summary and Noteworthy Information

Liberty provides an accredited college education at a relative reasonable price;  $140,000 for a 4-year degree compared to $300,000 at many other colleges and universities.  In addition, Liberty is noted for being able to meet their expenses primarily from program income including the provision of $228 million in education grants. Not many schools do this and one of the primary reasons appears to be because of lower compensation costs although the most highly compensated employees appear to be well compensated.  However, that said Liberty has a long way to go in other areas. Out of 30 trustees, 29 are male while 1 is a female. Of the 23 most highly compensated employees, 22 are male while 1 is a female. In addition, Liberty employs many individuals who have a family relationship with a board member, key employee, or an officer.  Liberty also paid for first class or charter travel and travel for companions – perks that many would say are unnecessary and where the funds would be more useful helping the underprivileged, hungry, sick, or poor.

To read the IRS Form 990 for the year ending June 30, 2017, click here.

To read an update, click on :  Executive Compensation and Perks at Liberty University (2018)