Treasurer earns twice as much as peers while GW underperforms financially

Media Credit: Hatchet File Photo

Executive Vice President and Treasurer Lou Katz’s total compensation package topped $1.41 million – more than double what the average chief financial officer received at 13 competitor schools.

Media Credit: Hatchet File Photo
Executive Vice President and Treasurer Lou Katz’s compensation package topped $1.41 million – more than double what the average chief financial officer received at 13 competitor schools.

Updated: Aug. 25, 2014 at 7:07 p.m.

The University’s top financial officer earned a larger compensation package than his counterparts at competitor schools last fiscal year, though most outperform the institution financially.

Executive Vice President and Treasurer Lou Katz’s total compensation package topped $1.41 million, according to fiscal year 2013 tax forms. That’s more than double what the average chief financial officer received at 13 of the schools GW calls its peers, including Duke and New York universities and the University of Southern California.

At the same time, the University’s nearly $1.5 billion endowment is smaller than over half of its competitor schools, and it relies more on tuition dollars than most of its peers. GW’s investment portfolio grew about 9 percent last year, falling behind many of those institutions, and 11 have higher credit ratings, according to Moody’s Investors Service.

“It’s highly likely your institution could hire a good financial services officer for half a million dollars less,” said Cary Nelson, the president of the American Association of University Professors.

The 64 percent year-to-year jump in Katz’s total pay comes from a deal he negotiated when GW hired him in 1990 and promised him a bonus of $533,994. Without his bonuses included, Katz’s salary still outpaced a dozen finance chiefs. He declined requests to sit for an interview.

Georgetown University declined to provide its treasurer’s compensation, salary or tax filings. Historically, the finance officer at Georgetown has not received a larger compensation package than Katz, based on fiscal year 2009 to 2011 tax forms.

The Board of Trustees’ executive committee determines Katz’s compensation. University spokeswoman Maralee Csellar said the committee uses compensation data from an outside consulting firm that includes information from similar universities, and she said Katz’s compensation was “based on achieving established goals and meeting performance expectations.”

His pay also topped University President Steven Knapp’s $1.28 million compensation the same year.

Katz steers GW’s financial decisions like crafting annual budgets, planning major campus construction projects and overseeing landmark deals, such as GW’s merger with the Corcoran College of Art + Design.

Experts say Katz’s earnings show the University’s trust in the administrator who has worked at GW for 24 years.

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Nelson, who has studied higher education compensation trends, said the 10 percent difference between Knapp’s and Katz’s compensation could unintentionally send a message that GW cares more about its bottom line than its values.

“It says that money is what matters most and the person who manages money is the most valued person on campus,” Nelson said.

Katz has led the University through two decades of rapid expansion, including pouring about half a billion dollars into construction projects and growing the endowment by about four times from where it sat at $296 million when he started in 1990, according to data from the National Association of College and University Business Officers.

Still, that growth has come with challenges.

Earlier this summer, creditors warned that because the University’s tuition is already relatively high, it could run into trouble down the line since it cannot continue raising tuition to generate revenue.

GW’s debt will hit an all-time high of $1.7 billion after the University takes out $300 million in bonds this fall. That will allow the University to lock in lower interest rates and pay for projects like moving Student Health Service to campus.

Tulane University, one of GW’s peers, has a total debt load of about $460 million, according to credit reports, which is less than half the size of its $1 billion endowment. Tufts University has about $628 million in debt and an endowment that’s about $1.4 billion, according to its reports.

Northwestern University, which has the highest credit rating of GW’s peers, has about $1.5 billion in debt. Though Northwestern’s debt load is a similar size to GW’s, its endowment is about five times larger.

Media Credit:
Compensation totals for treasurers at some of GW’s peer schools. Source: 990 tax forms

Northwestern’s $7.8 billion financial foundation is the largest of any of GW’s peer schools, and that solid ground helps it carry larger amounts of debt. Northwestern’s top financial executive earned the second-highest salary among GW’s competitor schools, making about $700,000.

Katz has held his position longer than all but one of his peers. American University’s treasurer, who died in January, had worked at the school for more than three decades.

Katz is the last remaining senior administrator from former University President Stephen Joel Trachtenberg’s administration.

“There is an increasing demand for very capable executive leadership,” said Ron Seifert, vice president at the compensation consulting firm Hay Group. “You have to believe that the committee, the board and the trustees view him as being valuable and important to the organization.”

Earnings are often based on an individual’s value to the administration, said economics professor Anthony Yezer, who sits on the Faculty Senate’s budget and finance committee. He said Katz’s benefits and steadily increasing salary may also show creditors’ trust, despite GW’s growing debt.

“Since we borrowed up to our eyeballs, we need to preserve the confidence of our creditors. To the extent that Katz has the confidence of our creditors, maybe that’s part of his value,” Yezer said.

Chris Denhart, the administrative director at the Center for College Affordability and Productivity, said Katz’s compensation mirrors a trend: More schools across the country are giving generous packages to their top executives.

“Its kind of a Catch-22. We see all this wasteful spending and accruing debt but it is very hard to reverse it,” Denhart said. “A lot of times we see boards of trustees, eating out of the hand of the president, so there really is no pressure from them to keep administrative compensation down.”

This post was updated to reflect the following correction:
The Hatchet incorrectly reported that Executive Vice President and Treasurer Lou Katz earned a larger compensation package than his counterparts at GW’s peer schools last year. It was last fiscal year. We regret this error.

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