Harvard’s tax returns reveal new information about former President Lawrence H. Summers’ severance package, which included a $1 million deferred-interest loan for the purchase of a home.
The former president drew a $580,115 salary in fiscal year 2006, his last year in office. With expense-account payments, allowances, and benefits, Summers’ compensation summed to $714,005, according to filings released yesterday.
Summers’ 2006 salary rose 3.1 percent from the previous year. His 2005 compensation was the second-lowest among Ivy League presidents, according to a database maintained by the Chronicle of Higher Education.
The $1 million loan to Summers came last June, when he and his wife, Professor of English Elisa New, purchased a 16-room colonial house in the Brookline suburb. Summers and New paid $2.53 million for the home, according to the Norfolk County Registry of Deeds.
Summers’ first interest payment is due to Harvard in August 2010, and he is exempted from payments on the principal of the mortgage through July 2014.
The University also reported a $250,000 mortgage loan to New and a $38,044 educational loan to her.
Harvard generally provides mortgage-repayment assistance to recruited tenured faculty members. It also provides zero-interest or reduced-interest loans to several of its top officials.
Summers continued to draw a salary from the University this year, while he was on sabbatical.
He will remain on the Harvard payroll as the Eliot university professor—one of 21 faculty members holding the prestigious university professorships. Harvard has not disclosed the salary that it pays to its university professors.
In addition to his university professor’s pay, Summers will receive salary supplements from Harvard, although the total value of all these supplements will be less than his fiscal year 2006 pay.
According to the tax returns, Harvard’s highest-paid faculty member last year was Baker Foundation Professor of Business Administration F. Warren McFarlan ’59, who earned $300,000 in salary—along with a $347,500 retirement-package payment, $14,000 for executive education teaching, and $45,040 in benefits. McFarlan was traveling in Taiwan yesterday and could not be reached for comment.
Harvard’s tax returns only reveal payments to the University’s officers and to its five highest-paid employees. That means Summers’ earnings in the future will not be disclosed unless his total compensation places him in the top five.
Summers’ deputy, Provost Steven E. Hyman, received an 8.3 percent raise last year, bringing his salary to $420,000.
Interim President Derek C. Bok has declined to take a salary during his one-year term.
“The influence of money is already too strong on many campuses,” Bok wrote in a 2002 essay.
Summers’ severance pay has been the subject of much speculation in the year since he stepped down. A June 2006 article in Boston Magazine cited a source saying the sum would be “breathtaking.” The Crimson quoted two sources in June 2006 who said the amount would be “huge.”
Hefty severance packages are increasingly common in higher education. The former president of Boston University, Daniel S. Goldin, received $1.8 million from the school when he stepped down in 2003 before ever serving a day on the job. American University granted its former president, Benjamin Ladner, a severance payment in the range of $1 million in 2005—even though auditors accused Ladner of financial improprieties. The former president of Florida Gulf Coast University, William C. Merwin, garnered an $811,000 package after he resigned in January following an extramarital affair with a female professor.
Harvard spokesman John D. Longbrake declined to comment on the tax returns.
“We don’t discuss compensation other than what we report in the tax filings,” he said.
Summers, reached at his Brookline home last night, said, “No comment.”
Since his resignation, Summers has signed on as a managing director at the hedge fund D. E. Shaw and as a columnist for the Financial Times.
—Staff writer Daniel J. Hemel can be reached at email@example.com