Penn State president could get $1.5 million bonus if she stays through June 2032

Penn State University trustees on Friday showed they want to retain President Neeli Bendapudi long term by approving incentives including a $1.5 million bonus if she stays in office through June 30, 2032.

The vote to amend her compensation package came as the state’s flagship public university confronts what some have called its most severe budget challenge in modern history.

Bendapudi, 60, who took office in May 2022, has reduced by more than half a projected $140 million deficit. But she did so with controversial spending cuts now in place or pending that touch Penn State systemwide, from its main University Park campus to its 20 branches statewide.

She is eyeing another $94 million in reductions in the 2025-26 budget – more than half of them impacting what the university calls its Commonwealth campuses, where enrollment is down sharply.

In an apparent acknowledgement of the school’s financial crunch, Penn State trustees meeting at University Park said Bendapudi’s revised compensation leaves her base salary of $950,000 unchanged for 2023-24. She earlier indicated she would decline any increase in that amount, said Mary Lee Schneider, chair of the board’s Subcommittee on Compensation, which endorsed the changes Thursday.

Nevertheless, Friday’s full board vote creates what amounts to a rolling five-year or “evergreen” contract through annual automatic contract extensions agreed to by both parties.

Bendapudi’s compensation package already offered her a $1.25 million retention bonus if she stayed five years. Friday’s vote adds a $1.5 million payment ($300,000 annually for years 6-10) if she remains presdent through June 30, 2032.

She will also see an annual boost in the Supplemental Retirement Plan from $350,000 to $555,000, according to the resolution approving the revised compensation package.

One trustee, Barry Fenchak, opposed the increase. He noted that Penn State already pays its president the second highest compensation among Big 10 universities.

“Certainly we are not now nor have we been in recent years stingy with regard to presidential presidential compensation and I don’t think we should be,” he said.

“Now, we can look at these particular proposals, and we can tell ourselves that the amount of money involved is insignificant, that it’s a rounding error compared to the overall budget,” he added. “And we can convince ourselves that this is somehow a necessary step to achieve greatness, or any number of other justifications, but I don’t really think any of those are particularly compelling or convincing.”

He said it could be perceived as “somewhat tone deaf and an unwise decision’’ amid potential program job losses.

But Board Chair Matthew Schuyler saw it differently, as did others on the board voting yes.

“In evaluating President Bendapudi’s performance, it was clear that her dedication to making Penn State a model university for student success has been outstanding, as demonstrated by her many initiatives and tireless efforts toward this goal,” Schuyler said in a statement. “In this demanding era for all of higher education, which requires presidents to set and execute transformational goals, Neeli’s decisive leadership — marked by foresight and willingness to make tough, but necessary, decisions — ensures Penn State’s continued prominence as a world-class institution.”

Schuyler noted that this week, President Bendapudi and her husband, Venkat, made an outright gift of $250,000. They indicated their gift will be directed primarily to the University Libraries to help ensure access and support for students with financial need; the Centre for the Performing Arts; and Student Mental Health Services and Support.

Board leaders said the compensation changes were based on both a performance evaluation of Bendapudi and a consultant’s assessment of the CEO market.

Overall, universitywide enrollment for fall 2023 remained stable at 87,903 students.