TRANSPARENCY TUESDAY: Government officials’ “golden parachute” agreements aren’t “confidential personnel records”

Having Graham Spanier as president cost Penn State’s reputation dearly. Getting rid of him wasn’t cheap, either.

In the year that he was ousted — on the day of his criminal indictment alleging complicity in the cover-up of coach Jerry Sandusky’s serial child molestation — Spanier was given (on top of his normal compensation package) an extra $1.2 million just to go away, making him not just the nation’s most reviled college president, but also its highest paid.

“Golden parachute” agreements for college executives are a matter of intense public interest at any time, but doubly so given the austerity measures that many colleges are imposing that (unlike an extra million for the former CEO) directly affect the quality of instruction.

The rise of the “supersize severance” is no accident. As one executive headhunter told BloombergBusinessweek, colleges are image-conscious about overpaying their presidents, especially as they ask students and parents to continually pay more, but “an exit bonus is palatable because until the guy leaves you don’t have to deal with it.”

In 2010, the president of little Birmingham-Southern College (enrollment 1,305) ranked third in the nation in compensation — ahead of the presidents of of Yale, Stanford, Harvard and Princeton — because of a buyout agreement that guaranteed him three years’ salary ($2.3 million) if he left office. (No wonder the school was a financial disaster zone.)

The $1.2 million payout from New York’s New School to former U.S. senator Bob Kerrey, who stepped down as president in 2010, even became a campaign issue in Kerrey’s unsuccessful Senate comeback attempt last November.

Try as they may, government agencies cannot lawfully withhold the details of executives’ severance agreements from the public.

Just last week, a state-court judge in Maryland ruled in favor of public access to the buyout agreement reached between Frederick Community College and its recently departed president, Frederico Talley.

In a May 23 decision, Frederick County Circuit Court Judge G. Edward Dwyer Jr. ruled that Maryland’s Public Information Act required disclosure of a Feb. 14 contract — formalized in a closed-door college trustee meeting — under which Talley agreed to resign. (The college eventually produced a redacted version of the document showing that Talley would receive a $90,000 severance, which probably left him wishing he’d had the phone number of Bob Kerrey’s agent.)

Maryland law does allow state agencies to withhold some personnel records. But the “personnel” exemption has been rather narrowly defined by state courts — “documents that directly pertain to employment and an employee’s ability to perform a job,” as one appeals-court ruling stated — so the exemption is not a catch-all excuse to withhold documents, especially not documents about significant financial decisions.

College attorneys told the Frederick News-Post that they are contemplating an appeal, and the documents will remain sealed pending that decision.

Judge Dwyer’s ruling in the Frederick case is consistent with a growing body of legal interpretations that severance agreements are a matter of public record, even if both parties to the deal have agreed to keep the terms confidential:

  • Last October, Kentucky’s attorney general found that Eastern Kentucky University violated the Open Records Act by withholding details about the resignation of a college administrator, relying on a legally invalid confidentiality agreement.
  • In 2010, a state Supreme Court judge ordered a New York school district to release the terms of a severance agreement with its superintendent — after the superintendent personally turned down the public-records request, saying the request was an intrusion into her “private life.”

As a final reminder, while severance agreements can’t be obtained through state open-records law at a private college, an executive payout of six or seven figures will show up in the institution’s IRS 990 tax form, which is a matter of public record.