Duke students protest bonuses during pay freeze

Duke students protest bonuses

Staff WriterDecember 3, 2010 

— Theo Luebke strolled the plaza outside Duke's Bryan Center on Thursday afternoon with a bucketful of apples and a tale of woe.

"Come on! Everyone's in this together! Get your apples!" he exhorted students passing by during the lunchtime rush. "With all the cuts we have around here and all the bonuses we have to give to the big guys, we need to raise all the money we can."

Luebke isn't really the Depression-era fruit peddler his costume suggested. Luebke and a couple of other Duke divinity students hawked apples, ostensibly to raise money for the university, while others dressed as paperboys distributed a mock newspaper railing against bonuses paid to top officials within Duke's healthcare system and investment company.

For Duke workers whose pay has been frozen of late, the bonuses appear staggering.

A couple of examples: Neal Triplett, president of the management company, received a $729,749 bonus on top of his $413,603 salary; Victor Dzau, chancellor of the Duke health system, got a $983,654 bonus, bringing his total compensation to more than $2.2 million.

Thursday's skit, which mostly drew befuddled looks, was the third in a series mocking executive pay.

"We're trying to do a satire on the spoken word of the administration," said Tim Kumfer, a second-year Duke divinity student. "Saying that we're all in this together."

Luebke, Kumfer and others are worked up over bonuses paid to top executives. They say the university paid the bonuses even as it was cutting jobs and eliminating raises for most other workers.

But Duke officials say the bonuses are contractually-obligated pay for work in 2008 and earlier, before the bottom fell out and Duke's endowment value dropped.

Details of the bonuses come from Duke's most recent IRS 990 form, which all nonprofit organizations must file. It covers the fiscal year ended June 2009, when Duke's endowment lost 24 percent of its value, dropping to about $4.4 billion.

It rose subsequently, and by June of this year was worth about $4.8 billion.

In recent years, Duke has frozen pay and eliminated jobs in an attempt to pare its annual operating budget by $100 million.

Nearly 400 workers have accepted buyout offers since early 2009. Their jobs were then eliminated.

"During a time when the administration is saying we all needed to tighten our belts and make sacrifices...as it turns out, some of the folks who lost money for Duke were giving themselves bonuses," said Amy Laura Hall, a tenured professor of Christian ethics. "I think that's obscene."

Duke explains

Duke officials say critics misunderstand the timeline and method by which some employees within the health care system and investment company are paid.

Triplett and others don't give themselves bonuses. They earn a base salary as well as bonuses for meeting or exceeding certain goals, Duke President Richard Brodhead said in an October meeting with Duke faculty.

And bonuses paid to endowment managers were for work done before the bad economy sent Duke's endowment plummeting, said Michael Schoenfeld, a Duke University spokesman.

Though the federal tax form covers records filed through June 2009, the bonus pay was based on performance in 2008 or, at times, for work done collectively over more than one year, Schoenfeld said. In the fiscal year 2007-08, the endowment gained 6.2 percent. In each of the prior years, the endowment realized a return of 20 percent or better.

Schoenfeld declined to say whether the university has given out more recent bonuses, not reflected in the federal tax filings.

eric.ferreri@newsobserver.com or 919-932-2008

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