The University of Iowa will pay 14 administrators, athletics officials and promising physicians nearly $6.4 million in retention bonuses over the next five years.
UI leaders say these employees bring value to Iowa by guiding the state’s largest university — and area’s largest employer — building good sports teams and ensuring Iowans have top-notch medical care.
“These are individuals who provide a very important service to our community,” UI spokesman Tom Moore said.
The retention bonuses, also called longevity pay, range from $20,000 a year for junior physicians to more than $500,000 paid as lump sums to several top administrators, according to The Gazette’s review of contracts for the 14 employees.
The bonuses show the UI’s focus on sports and medicine — which generate millions of dollars a year for the university — but they also reflect the national market in which there’s a greater demand for successful doctors and coaches than there is for, say, German language professors or journalists.
Until about a decade ago, retention bonuses were unusual in non-profits, including public universities, said Raymond Cotton, a Washington lawyer who specializes in contracts and compensation for university presidents.
As business leaders have taken over the boards that govern state universities, they are implementing ideas from the private sector, Cotton said. Retention bonuses and performance pay give leaders a financial incentive to stay and to be successful.
“Your presidents compete,” Cotton said. “So you want the best and the brightest.”
UI President Sally Mason has a deferred-compensation plan that started accruing at $60,000 a year when she was hired in 2007 and increased to $150,000 this fiscal year. She can collect $455,000 after July 31. Her compensation — including the longevity pay — is paid with taxes and tuition. Retention bonuses paid to other UI employees come mostly from private donations or patient revenue.
Cotton is now starting to see bonuses trickling down to university vice presidents.
Jean Robillard, the UI’s vice president for medical affairs, drew attention in November when a $579,000 retention bonus and a $112,000 performance bonus caused him to be the second-highest paid state employee at $1.28 million for fiscal 2011.
Paul Rothman, dean of the UI’s Carver College of Medicine, gets a lump sum equal to his base salary if he’s still medical dean on June 1, 2013. His salary for this year is $548,000.
Rothman received a $150,000 bonus in September 2010 and will get similar payments in 2012 and 2014 if he is still on the UI faculty.
Some universities have experimented with faculty bonuses.
Kent State University gave professors cash bonuses in 2009 after the university exceeded goals in fundraising, research grants and freshman retention, the Chronicle of Higher Education reported.
The UI recently started offering retention bonuses to hire promising medical faculty who also were being recruited by wealthier institutions.
Hospital uses bonuses to close pay gap
“If we can’t get them to move here, we have no chance,” said Dr. Joseph Buckwalter, head of orthopedics and rehabilitation at the UI.
Buckwalter used $25,000 annual retention bonuses to hire five orthopedic surgeons in the past two years.
The bonuses, when added to a base salary limited by the Regents, bring the UI hires closer to the total compensation offered by other academic medical centers and private hospitals.
The median total compensation for UI assistant professors in orthopedics and rehabilitation is $303,000, compared with $313,000 median compensation for all assistant orthopedics professors in the Association of American Medical Colleges 2010 report.
The median salary for general orthopedic surgeons in private practice is $473,000, according to the survey.
The demand for orthopedic surgeons is expected to rise in future years as baby boomers seek treatment to remain physically active, Buckwalter said.
“We have so many people in their 40s, 50s, 60s and even 70s running marathons, playing tennis, doing triathlons,” he said. “They all want to get back into the game.”
The UI tapped into this market by opening a $6 million Sports Medicine Center in 2009. Orthopedics faculty also are likely to serve patients at the planned $73 million ambulatory care facility the UI is developing at Coralville’s Iowa River Landing, Buckwalter said.
The new orthopedic surgeons, with specialties that include sports medicine, trauma and pediatric orthopedics, also have teaching and research duties.
Sports contracts are long-term with bonuses
Some of the largest retention bonuses at the UI are paid to athletics officials.
Head football coach Kirk Ferentz’s 10-year contract, signed in 2010, provides him a retention bonus each Jan. 31. The amount escalates from $325,000 in 2011 to $525,000 in 2015. He sticks at that amount through 2020.
Ferentz and other coaches also receive bonuses for meeting goals that include postseason play and high graduation rates for athletes.
Head women’s basketball coach Lisa Bluder gets an extra $50,000 in longevity pay in June 2012 and June 2013, followed by increasing bonuses from 2014 to 2018.
Head men’s basketball coach Fran McCaffery, hired in March 2010, doesn’t have retention bonuses in his two-year contract.
“Every time we sit down and negotiate a contract, each one is unique,” Athletic Director Gary Barta said. “People are at different points in their careers and different point in their career at Iowa. Fran is relatively new.”
Barta’s own deferred compensation package, signed in November 2009, provides him with annual contributions worth a total $770,000 that he can cash out in 2016.
The Gazette’s review of these 14 contracts shows some employees also receive one-time transition and relocation payments and moving expenses amounting to more than $40,000 a person.
Ferentz and Bluder, for example, have additional benefits of free game tickets, leased cars, athletic club memberships and $10,000-per-year in discretionary funds.
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