Was Booth Dean Worth $700K A Year?
An enterprising student reporter for the Yale Daily News recently dug through tax filings for the University of Chicago to find out the salary of the former dean of Chicago’s Booth School of Business. His eyebrow-raising discovery was that Edward “Ted” Snyder, who led the Booth School from 2001 until 2010 and is now dean of Yale’s School of Management, received base compensation of $702,606 in his final year as dean.
The Yale Daily News went on to point out that no one at Yale, with the exception of President Richard Levin, had made as much money. In fact, the highest paid dean at Yale in 2010 was School of Medicine Dean Robert Alpern who apparently earned $647,949—about $55,000 shy of Snyder’s payout.
The inevitable, provocative question: Should the dean of a nonprofit, educational enterprise be paid more than $700,000 a year? Or, more specifically, was Mr. Snyder worth all that dough?
This is a rather familiar issue to me. For more than a decade as management editor of BusinessWeek magazine, I reported and wrote all the cover stories on executive pay. And every year, without fail, I would grapple with the same concern: Were the executives who pulled down millions of dollars worth the money they were paid?
SNYDER MADE ROUGHLY $6 MILLION AS DEAN OF THE BOOTH SCHOOL OF BUSINESS
If you assume that Mr. Snyder was paid roughly the same amount for each year he was dean of Chicago Booth, he would have made about $6.3 million for his deanship. Let’s round down to account for pay raises and settle at $6 million. No question, that’s a lot of cash for the head of a nonprofit.
Yet by any measure, Mr. Snyder was a bargain to the University of Chicago. During his leadership of Booth, he became the most accomplished B-school dean of his era. Among his many achievements, Mr. Snyder helped to reel in the largest single gift to a business school in history, a $300 million donation from alumnus David Booth. It was also the largest gift ever received by the University of Chicago. He also pulled in a $20 million gift from alumnus Robert Rothman, a $7 million gift from alumnus Michael Polsky, and an undisclosed grant from alumnus Charles Harper that was called “one of the largest cash gifts” in the school’s history.
When he decided to take his leave from Booth in 2010, Mr. Snyder left the school with a brand new $125 million state-of-the-art building as well as the richest endowment in its history—some $511 million, a sum that even excludes the $300 million gift from Booth. The business school’s endowment when he took over was just $197 million.
THE WORLD’S MOST ACCOMPLISHED BUSINESS SCHOOL DEAN OF THIS ERA
During his nine years as dean, Mr. Snyder tripled student scholarships, doubled the school’s endowed faculty chairs and retained more senior faculty than any other Chicago dean in the past 50 years. The quality and diversity of Chicago MBAs significantly improved, with average GMATs of enrolled students now 715, up from 687, and women representing 35 percent of the class, up from 27 percent.
No less crucial, under Mr. Snyder, Chicago has been named the best U.S. business school three consecutive times in the highly influential rankings of MBA programs by BusinessWeek. The year before he arrived in 2001, Booth had sunk to a lowly rank of 10. By 2006, it captured the No. 1 spot.
Rankings are controversial for lots of reasons, but they also matter because the best applicants to MBA programs pay attention to them. The value of being ranked tops three times? Like the Mastercard ads say, it’s priceless. It’s not unrealistic to say that each No. 1 ranking was worth at least $10 million in reputational capital and free marketing to the Booth School, allowing it to gain access to better applicants and faculty. It also doesn’t hurt when your proud alumni can be even more enthusiastic about their alma mater because it has been proclaimed best in class over the likes of Harvard, Stanford, Wharton, and local rival Northwestern University’s Kellogg School of Management.
BOTTOM LINE; HE CONSERVATIVELY BROUGHT SOME $800 MILLION IN VALUE TO THE SCHOOL
Doing some quick back-of-the-envelope arithmetic on all this—something that a B-school professor at Chicago would clearly fail me for—it looks like Mr. Snyder helped to bring in well over $800 million in cash and gifts, endowment support, and reputational capital during his Chicago Booth stint. This is a conservative estimate, no less.
The university’s return-on-investment for its $6 million in pay to Mr. Snyder? Something like 135 to one. Those are Steve Jobs-like numbers, though I’m hardly comparing Mr. Snyder to the greatest entrepreneur this generation has ever seen. But if you ask me, Mr. Snyder was severely underpaid for his spectacular performance on the job.