Dartmouth Releases Tax Return

By Rick Jurgens

Valley News Staff Writer

Published: 05-17-2016 12:24 AM

Hanover — Dartmouth College President Phil Hanlon’s 2014 compensation package broke the million dollar barrier but his total of $1.1 million lagged behind Chief Investment Officer Pamela Peedin’s $1.2 million in the college’s pay hierarchy, according to a tax return made public by the college on Monday.

Eleven administrators and faculty members had pay packages of $500,000 or more.

Justin Anderson, a college spokesman, said that “the compensation for top talent at senior levels at Dartmouth is aligned with our peer institutions including the Ivy League schools and is predominantly at the lower to middle range for comparable positions” at those institutions. The market, he said, is “national, not local.”

As an organization exempt from federal income taxes, Dartmouth must make public its annual tax record. However, the deadlines for filing, including routine extensions, are a full 10½ months after the end of the fiscal year. And nonprofit tax returns (called form 990s) do not disclose salaries for that fiscal year but for the calendar year that ended during the fiscal year.

The upshot is the newly released document shows what the college paid back in 2014. That year, Hanlon’s $1.1 million package included $816,000 in base salary and $183,000 in “retirement and other deferred compensation.” 

Included in Hanlon’s compensation package are charter flights, which the college covered because of “the lack of a major commercial airport within 80 miles of Dartmouth,” the tax return said. The drive from Hanlon’s residence on Webster Avenue to Manchester-Boston Regional Airport is 81.2 miles, while the drive to Burlington International Airport is 93.2 miles, according to Google maps. The costs of Hanlon’s charter flights were “fully defrayed by private donations designated for this purpose,” according to the tax return.

Hanlon’s compensation also included the value of living in that residence, which the college provided, as it did housekeeping services for cleaning and maintenance. Others who got provided college housing were Provost Carolyn Dever and an unnamed former Geisel dean.

Another executive — former Geisel School of Medicine Dean Wiley Souba — also edged above the seven-figure compensation mark, despite ending his tenure at mid-year. Souba’s compensation package was just over $1 million.

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Souba’s pay package included “deferred compensation pursuant to the terms of his initial contract,” Anderson said.

For the third straight year, Peedin, who works in Boston, was Dartmouth’s highest-paid employee. The college paid her $1.2 million, including base pay of $488,000 and incentive compensation of $670,000.

Peedin oversees Dartmouth’s investment portfolio, which was valued at $5.7 billion at the end of the fiscal year that ran through June 2015. That included the college $4.7 billion endowment, which was tapped to provide $212.5 million, or about 24 percent, of operating revenue that year.

Still, total operating revenue of $876.2 million fell short of operating expenses of $891.4 million in fiscal 2015, resulting in a small operating deficit of $15.2 million.

Deficits have been a hot issue on campus, especially at Geisel, where warnings that the medical school was on track to lose $30 million in a year prompted a wave of reorganizations and job cuts. The college eliminated 30 jobs and responsibility for the paychecks of 285 Geisel faculty and staff recently was transferred from the college to Dartmouth-Hitchcock, the hospital and clinic operator that has an affiliation with the college but is independent.

Last month, bond rater Moody’s Investors Service noted the college’s “expectations of moderate operating deficits through (fiscal year) 2019 as the college implements strategic initiatives.” Moody’s cited Dartmouth’s “excellent academic reputation, superior fundraising, and strong cushion of wealth and liquidity” as it issued an Aa1 rating to a $250 million bond issue that Dartmouth completed recently. An Aa rating indicates securities that are judged to be “of high quality and are subject to very low credit risk,” according to Moody’s.

Much of that cushion is parked in the endowment overseen by Peedin, her staff of 13 and an 11-member investment committee that includes current and former trustees.

The college’s investment portfolio at the end of fiscal 2015 included $1.1 billion in so-called hedge funds, $1 billion in limited partnerships in private equity and venture capital funds and $703 million in real estate and real asset partnerships, according to the tax return.

Some of that portfolio is invested in funds owned or managed by trustees or investment committee members. New Hampshire law requires disclosure of some of those investments. For example, three weeks ago Dartmouth purchased a legal notice that it had entered into a “swaps agreement” with Goldman Sachs & Co. Elizabeth Fascitelli, a member of the investment committee and trustee-elect, is a managing director of Goldman Sachs.

The college’s tax return discloses an additional $28.5 million contributed during fiscal 2015 to funds owned or managed by current or former trustees: $26.5 million to the Lone Sierra fund managed by Stephen Mandel, a former trustee chairman who still serves on the investment committee; $1.3 million to a fund managed by TPG, a private equity firm where James Coulter, vice chairman of the Dartmouth board, is a founding partner; and $753,000 to a fund run by Technology Crossover Ventures, a venture capital firm where current Chairman Richard Kimball is a partner.

The tax return also notes $6.7 million in distributions, or income earned, from trustee-affiliated funds during fiscal 2015: $5.4 million collected from funds run by TCV, where Kimball is a partner, and $1.3 million from TPG, where Coulter is a partner.

In the past, Dartmouth leaders and spokesmen have affirmed the investment management role of some trustees, arguing that some of “the world’s leading money managers” are on the board, so that avoiding stakes in their funds would have driven down returns from endowment investments.

The college had two dozen employees or agents overseas, including 19 in Europe, two in east Asia and one each in the Middle East, South America and Sub-Saharan Africa, but most of its overseas spending — $1.2 billion out of $1.26 billion — were in Central America and the Caribbean. Many alternative investment limited partnerships incorporate in that region for tax and legal reasons.

Anderson said that some of Dartmouth’s investments overseen by outside managers “may be created in the Cayman Islands because of the attractive business environment for establishing these types of funds.”

Those investments are “subject to U.S. tax law for our worldwide income” so that Darmouths’s holdings are “subject to U.S. tax law on our share of the earnings from the investment fund activity, whether the funds are located in the Cayman Islands or in the U.S.”

Darmouth’s tax filing included additional compensation tidbits, such as the disclosure of signing bonuses paid to Dever ($115,000) and Vice President of Campus Services Lisa Hogarty ($30,000), and the $289,000 “severance arrangement” handed over to Myron McCoo, former vice president for human resources.

Others high on Dartmouth’s pay pyramid included Tuck School of Business Dean Paul Danos ($844,000), Tuck professors Sydney Finkelstein ($709,000) and Paul Argenti ($650,000), Geisel department chairs Richard Freeman in surgery ($747,000) and Alan Green in psychiatry ($694,000) and college administrators Richard Mills ($668,000), Dever ($640,000) and Robert Donin ($510,000).

Tax-exempt organizations are required to disclose lobbying activities. Dartmouth’s fiscal 2015 lobbying included meetings with members of Congress to talk about “federally funded research programs,” a joint effort with other universities to seek changes to the Commodity Exchange Act, talks with New Hampshire legislators about higher education and discussions on “sexual violence legislation” with the staff of U.S. Sen. Kelly Ayotte, R-N.H.

Rick Jurgens can be reached at rjurgens@vnews.com or 603-727-3229.