About 30 students delivered a giant check and flowers to Dr. Victor Dzau’s office yesterday to protest executive compensation at Duke.
Administrators, however, said a recent op-ed article that appeared in The Herald-Sun—which protesters said triggered the demonstration—misrepresents Duke’s salary structure.
The article, written by Ed Rickards, Trinity ’63, Law '66 and former editor of The Chronicle, lists compensation bonuses for several Duke executives, ranging from professionals in the Duke University Health System to those in Duke Management Company—which handles Duke’s investments and endowment.
Beyond a base compensation of almost $1 million, Dzau, chancellor for health affairs and president and chief executive officer of DUHS, received additional payment of $983,654 in 2008—at a time when the University initially experienced budgetary constraints. But Doug Stokke, assistant vice president of communications for DUHS, said Dzau’s compensation needs to be viewed in its proper context.
“I think the question is the use of the word ‘bonus’—Dr. Dzau’s salary is comprised of a portion that is guaranteed as well as a portion that is at risk, based on meeting performance expectations that are set and evaluated annually by the DUHS Board [of Directors],” he said. “He can receive his ‘at-risk’ compensation if he meets those expectations.”
Dzau said his compensation is based on a number of factors intended to measure the progress of DUHS. He added that he is “hurt that people accuse [him] of things they don’t understand,” and that he feels he is a man of integrity who receives money as stipulated by prior contractual agreements.
“I don’t think I want to escalate this,” Dzau said. “I have a job to do—why escalate this?”
During the protest, students gathered at 12:30 p.m. in formal, “black tie” wear on the Chapel’s steps. The group, comprised of mostly Divinity School students, demonstrated against excessive compensation for top officials in DUHS and DUMAC as well as a Fuqua School of Business professor’s compensation from Duke Corporate Education, a nonprofit provider of custom executive education.
“It’s not an indictment or critique of necessarily any [one] person. We made the checks to acknowledge that some of these higher execs in institutions connected to Duke have gotten lots of money while others have [lost their jobs],” said Brandy Daniels, an organizer for the event and a graduate student in the humanities.
Michael Schoenfeld, vice president for public affairs and government relations, said he was unaware of the protest yesterday. He added, however, that the op-ed and the protesters’ subsequent press release contained several “misstatements.” For one, the compensation detailed in the op-ed was actually based on performance prior to 2008 and was dependent on incentives that had been agreed to well before the peak of the financial crisis.
Schoenfeld also said the named executives receive their salaries from different subsidiaries of Duke—Duke Corporate Education, DUHS and DUMAC. The three organizations operate as separate legal entities, each with its own budget, executive board and compensation policy.
“Some people at DUHS and DUMAC have employment contracts that include incentive and performance pay, so that a significant percentage of their compensation is determined each year based on their performance and is thus at risk,” Schoenfeld said. “Those employment agreements are reviewed by the boards of those organizations and outside compensation advisers on an annual basis.”
For example, Dan Laughhunn, a professor at Fuqua, receives compensation from Duke Corporate Education that should not be characterized as a bonus, Schoenfeld said. Laughhunn was presumably paid for services he provided to Duke Corporate Education and its clients.
But Rickards said it was Duke that chose to create the three entities in the first place, adding that the Board of Trustees perpetuates their existences.
“That’s like saying... ‘I’m not responsible for my left arm, please just watch my right arm,” he said.
Rickards added the he has not been in contact with the students who organized the protest. In addition to submitting op-eds to newspapers, Rickards is one of five contributors to Duke.Fact.Checker blog.
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