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Ask Barry: Penn State Presidential Compensation

  • Post last modified:February 27, 2024

Alumni had a lot of questions after last week's vote made Penn State's president the highest paid in the Big10. I try and answer them.

Alumni have have been reaching out to me with many questions about Dr Bendapudi’s recent raise, which many feels contradicts the serious financial situation the university finds itself in.

For background, here’s the Subcommittee on Compensation, chaired by Trustee Mary Lee Schneider, explanation for recommending Dr Bendapudi be given the raise at the February 16, 2024 Board of Trustees meeting (emphasis mine):

“… the subcommittee held an executive session [February 15, 2024] to discuss proposed changes to President Bendapudi’s employment contract and voted in support of a recommendation to the full board regarding compensation changes based on the results of the president’s performance against established goals for the 2022-2023 year.

“During the executive session, a summary of President Bendapudi’s performance review was presented along with a presidential compensation market assessment prepared by Seigel, our executive compensation consultant. The committee unanimously approved a recommendation to the full board regarding proposed changes to the president’s compensation.

“The recommendation being presented to the board today includes the following:

No changes in base salary. President Bendapudi indicated she would decline any proposed increase to her base salary.

Implement an evergreen five year contract. With the goal of ensuring mutual long term commitment, we  recommend  moving to an evergreen construct, meaning each year, with mutual agreement, President Bendapudi will always have a five year contract.

"To better align President Bendapudi’s overall compensation to the market of presidencies of top-tier complex institutions inclusive of academic healthcare enterprise, ten-figure research enterprises, and more, the subcommittee further voted in favor of support of the following recommendations:

Starting in 2027, increase the completion bonus by $50,000 a year;

Effective July 1, 2023, an annual increase of $150,000 combined with an additional $55,000 to account for offsets associated with specific foregone benefits such as insurance and financial advising.

This brings the total deferred compensation from $350,000 to $550,000.”

  • Wasn’t President Bendapudi signed to a 5 year contract just two years ago (2022)?  

Yes, she was.

  • On the chart you included, some Big10 Conference presidents have “A portion is at-risk goal based” after their salary. What does that mean?

These universities, Ohio State, Indiana University, and Purdue University are among those who added performance bonuses to their president’s contracts. Specific metrics were established by their boards, such as graduation rates, financial performance, etc.  If the president reached the specific goal, they would receive that additional compensation.  For comparison purposes, we assumed that those presidents would meet all of their goals and receive 100% of their at -risk pay.  Even with those assumptions, Penn State’s presidential pay is the highest of the group.

  • What performance goals does Dr Bendapudi have?

A year ago (February, 2023) Dr Bendapudi announced ‘A Transformational Penn State Experience’ with six strategic focus areas of self-evaluation but no metrics to measure achievement towards those goals.

Aside from these, I am not aware of measurable or deliberated goals or performance expectations set by the Board of Trustees. No portion of President Bendapudi’s income is at risk.

  • What is Trustee Schneider talking about when she said ‘established goals’?

I have no idea. I suggest you ask her directly: the e-mail address for the Penn State Board of Trustees office is bot@psu.edu, or you can call (814) 865-2521 and request she return your call.

  • Which ‘top-tier complex institutions’ are Penn State’s class?

When I look at comparatives to evaluate Penn State, I start with the other 15 public universities (Northerwestern and USC are private) in the Big10 Conference. They are our self-identified peer group, and are all national universities with large enrollments and complex structures. It is also appropriate to separate private from public institutions.

If, as some would like to, we compare Penn State to Ivy League universities, we should also compare academic performance. In either comparison, Penn State does not seem to be getting a good return on our investment.

  • With many alumni feeling the economic crunch and Penn State’s announcement of major cuts across the board, this raise seems tone deaf. Why did the other trustees vote for this?

I don’t know. As you can see in the video of the meeting, after I stated my concerns and viewpoints there was no public deliberation or discussion. I can only suggest you reach out to the other trustees, including the eight other alumni trustees, whose duty it is to reply to you. Alumni Trustees Brandon Short, Steve Wagman, and Alvin DeLevie are running for re-election this spring.

  • In your opinion, what is an appropriate salary for Penn State’s president?

Penn State has never been stingy with presidential compensation. Penn State’s presidential compensation is again the highest among its peers, as it was during the tenure of President Barron. Among the other fifteen public universities in the Big10, the average presidential compensation is approximately $1.07 million per year. That may be a reasonable starting point. 

  • What budget cuts has Dr Bendapudi indicated?

In order to reach one of her stated goals of balancing Penn State’s budget by 2025, she will have to overcome the budget deficit she inherited from Dr Barron, which is in the neighborhood of $100 million. Balancing the budget can be accomplished by increasing revenue, reducing spending, or both.

The largest part of the revenue increases implemented under Dr Bendapudi is tuition revenue. Dr Bendapudi asked for and the Board approved (despite my opposition) a budget for 2022-23 that increased tuition by over $100 Million (2-6% per student).  Subsequently, Dr Bendapudi requested and the Board approved (despite my opposition) another increase for 2023-24. Penn State has also continued to favor out of state students in the admissions process (driven by the desire to increase tuition revenue), added a surcharge for students taking over 19 credits, and further increased the tuition surcharges for students in specific colleges like the engineering and business colleges. The total impact of those tuition increases is in excess of $200 million per year of additional charges to students. 

Dr Bendapudi has also announced plans to slash $94 million from the Penn State budget, including deep cuts to Commonwealth campuses and a plan for a new Budget Allocation model and Strategic Compensation. The impact of those initiatives on the budget remain to be seen.  The Budget Allocation model is purported to calculate new methods for “slicing up the revenue pie” to various colleges and departments. The Strategic Compensation model claims to adjust salaries of existing employees more equitably, including correcting perceived salary discrepancies for certain demographic groups.

While selective hiring freezes have been implemented throughout the university, new positions have been created and filled within administrative ranks along with substantive salary increases to existing administrative positions.

I am especially concerned about a planned realignment that may include layoffs, hiring freezes, and increased workload for certain employees. Our faculty and staff are being asked to make great sacrifices, and are concerned with the short and long-term future of the university.

Finally, I’d like to share some key points regarding presidential evaluations that I circulated to my fellow trustees during the presidential evaluation. It is important to note that the process of setting these goals provides benefits far beyond simply setting standards for presidential performance. It also forces the Board to be deliberate and strategic in establishing and prioritizing the various, and sometimes conflicting, missions of the University:

In order for ANY performance standards, goals, and expectations to be useful – and, by proxy, for any performance evaluations to be worthwhile, they must meet certain minimum standards:

1) They must be congruent with the achievement of the institution’s most critical missions
2) They must be clearly defined and measurable and quantifiable – both in the present tense and moving forward
3) They must be ambitious, while not being unreasonable or unattainable
4) They must reasonably fall within the authority of the party held responsible

If done properly, the setting of those goals and expectations makes the evaluation process essentially a fait accompli. And it should. A well-defined process of setting the goals:

  •  Forces the Board to deliberate on just which missions are the most critical to the University and its stakeholders

  •  Requires the Board to fully understand, in clear and factual terms, exactly where the University currently stands with regard to the achievement of those missions

  •  Requires the Board to monitor progress towards improving upon those missions

 All of these are very significant benefits, above and beyond simply serving as the structure to develop Presidential Goals. Only by knowing exactly what the mission is, knowing exactly where we are today, and knowing exactly what progress (or regression) has occurred, can any governing body evaluate the efficacy of its actions.


As a member of the Penn State Board of Trustees, I will from time to time be made aware of certain confidential information.  I will also engage with Trustees and administrators in private, off-the-record conversations, with the expectation of privacy on both parties. I take these expectations seriously, as they are required in order to catalyze important discussions.
As a fiduciary, it is also important that I engage in conversations with all stakeholders of the University. Stakeholders like you.  Discussions will involve publicly available information and issues before the Board, as well as my personal thoughts, concerns, and ideas. I also will continue to solicit your thoughts, concerns, and ideas, and plan to engage in meaningful conversations with you on those topics. I hope that you will continue to share your concerns and ideas with me.

I’d love to hear from you. Email me at barry@barryfenchak.com and let’s talk.

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