This message was emailed to faculty and staff on behalf of Board of Trustees Chair Donna Boswell on May 15:
Dear Wake Forest faculty and staff,
Earlier today, a crowd of nearly 13,000 gathered on Hearn Plaza to celebrate the achievements of nearly 2,000 graduates in Wake Forest University’s Class of 2017. If you haven’t already, I invite you to visit wfu.edu to see their smiling faces, read their inspiring stories and remember their many accomplishments.
In the broader context of higher education, today also bears significance as the IRS Form 990 tax filing deadline for colleges and universities across the country. Because these filings include executive compensation information for top administrators, they often attract media attention. We on the Board of Trustees, together with President Hatch, want to be as open and transparent as possible concerning this information.
The tax filing will show that in 2015, Dr. Hatch received a base salary of $839,944 and a performance bonus of $92,000. Dr. Hatch’s total compensation is benchmarked regularly by a third-party consultant reporting to an independent committee of the Board. Due largely to the vesting of a 10-year $2.89 million supplemental executive retirement plan (SERP) and other benefits such as housing and automobile, Dr. Hatch’s total compensation for 2015 was reported as approximately $4.23 million. Excluding the SERP-related amounts, Dr. Hatch’s compensation is comparable to the previous year.
A SERP is a form of deferred compensation commonly used in recruiting and retaining senior executives. In its most recent annual review of presidential salaries, The Chronicle of Higher Education explained the practice of providing competitive retirement benefits such as a SERP:
“Deferred-compensation plans are used commonly in higher education as a retention tool for top administrators. They work like this: A university sets aside money, tax-free, each year in a prescribed fund for the college leader, who may not withdraw any money from that fund until an agreed-upon date. Those earnings are typically forfeited if the employee resigns before the specified date. These arrangements usually complement a standard retirement plan, such as a 401(k).”
The Board of Trustees’ original offer to Dr. Hatch in 2005 included a SERP that would vest upon completion of his 10th year as president in 2015. Each year an average of $255,000 was accrued in the SERP, and the proper amount for each year was reported on that year’s 990 return. Thus, more than $2.3 million of the vested $2.89 million SERP had been reported on the previous nine returns. Nevertheless, the reporting rules require that the entire vested benefit, which includes accruals reported in the previous nine years, plus the final accrual and any investment net earnings be reported in the year of vesting, which was 2015.
The Board is gratified that our investment in Dr. Hatch has paid dividends for our University. He has seen Wake Forest through a transformational period that includes achieving the largest fundraising effort in the University’s history, adding more than $200 million for student scholarships and $100 million for faculty compensation and academic programs. He has orchestrated major realignments in the areas of business and medicine, implemented a test-optional admissions policy, increased the diversity of our student body, set the gold standard for personal and career development, overseen the Reynolda Campus’ most significant renovation and building effort since the 1950s, and ensured an academic and residential environment that educates the whole person.
Not a day goes by that I do not appreciate the Board of Trustees’ vision for Wake Forest and their confidence in Dr. Hatch’s ability to lead us through such a successful period in the life of our beloved University. In addition to the untold number of hours Dr. and Mrs. Hatch commit to Wake Forest, they have been among our most generous philanthropic donors. We believe Dr. Hatch’s compensation over the course of his tenure reflects his exceptional leadership.
Donna Boswell (’72, MA ’74)
Chair, Board of Trustees