Rao gets raise of 3 percent

July 14, 2004

CMU’s Board of Trustees approved a 3 percent increase in University
President Michael Rao’s salary July 8.

The raise will bring Rao’s salary to $236,200 per year.

George Ross, vice president for Finance and Administrative Services,
coordinated a presidential salary survey of 13 universities in Michigan
and 14 in the Mid-American Conference. Rao placed third out of 13 in
the state, but when deferred compensation is factored in, Rao placed
ninth. In the MAC, when factoring in deferred compensation, Rao places
last.

Rao is “dramatically underpaid,” said trustee John Kulhavi. “Based
on President Rao’s proven performance, he should be at the top of the
list.”

Trustee Roger Kesseler said Rao’s ranking indicates a developing
problem for the future of CMU’s president.

“We want to remain competitive in the marketplace, and our
president’s salary is becoming less competitive every year,” he said.

The additional 3 percent is not enough, many trustees said. But with
severe budget cuts they decided that is all the university could afford.

Trustee James Fabiano said the board should have a package put
together by December which will contain details about a deferred or
incentive compensation program for Rao.

“CMU is the fifth biggest university in Michigan and one of the most
popular,” Fabiano said. “President Rao received a great evaluation, and
we hope to at least get him in the mid-range (on the presidential
salary survey).”

Rao’s raise is congruent with a recent increase of 3 percent for 703
professional and administrative employees and senior officers this
academic year.

“That’s right at the same level as the P&A group. But it’s
minimal, and it’s not consistent with the market. But it’s something we
have to do,” Kesseler said.

Trustee Jeffrey Caponigro said he supports the idea of an additional
deferred compensation program “whole-heartedly.”

“It’s like any other business — we need to make sure we remain
competitive,” he said. “We need to make sure we keep our good people,
particularly our leader; and at the same time, you always wish you
could do more.”

Rao’s last raise was in July 2003, and he donated the entire $8,820
back to the university.