Vanderbilt Chancellor Nicholas Zeppos got nearly $3M bonus after budget cuts, layoffs

Vanderbilt Chancellor Nicholas S. Zeppos was paid more than $4 million in 2016, the same year his responsibilities were reduced because of the university’s split with Vanderbilt University Medical Center.

In 2016, Zeppos was credited with $4.3 million in total compensation, including a $2.9 million bonus, according to Vanderbilt tax returns provided in response to a request from the USA TODAY NETWORK.

Zeppos’ total pay in 2016 was comparable to the highest-paid presidents of private universities in the country in recent years.

More: Ten years in, Vanderbilt University's Nicholas Zeppos has increasingly weighed in on big national issues

The timing raises questions of the reason for the bonus, especially considering budget cuts and layoffs at Vanderbilt in the years preceding the large incentive payment, and as the university prepared to split from the hospital.

Vanderbilt University spokesman Princine Lewis declined to provide the specific reason for Zeppos’ bonus when asked if it was paid for certain goals met or completion of a contract.

Zeppos has overseen tremendous growth since becoming chancellor in 2008. Vanderbilt's endowment has increased by more than $1 billion in the past decade, and the university is ranked 10th in innovation and 14th overall by U.S. News & World Report among the country's best colleges.

“Several Vanderbilt University leaders, including Chancellor Nicholas S. Zeppos, received one-time incentive payments in 2016 related to their accomplishments as leaders of a top-tier, internationally-renowned research university,” a Vanderbilt statement said.

Big bonus followed layoffs, lawsuit

Vanderbilt’s chancellor has been among the highest-paid private university CEOs. According to The Chronicle of Higher Education, Zeppos was No. 5 on the list twice, earning $2.2 million in 2010 and $2.3 million in 2013. Former Vanderbilt Chancellor Gordon Gee was No. 3 on the 2005 list at $1.2 million.

But 2016 was a year that saw cost-cutting measures and the university and medical center split into two separate entities. That reduced Zeppos’ role to chancellor of only the university.

In 2013, Vanderbilt University Medical Center officials said they would cut about 1,000 jobs as part of a $250 million reduction to a $3.3 billion operating budget, but they ultimately kept about half of those employees.

In 2015, nearly 200 employees were laid off immediately, without notice, which they contended in a class-action lawsuit violated the Worker Adjustment and Retraining Notification (WARN) Act, which requires 60 days notification when layoffs impact large numbers of employees.

The laid-off employees won the lawsuit that would have cost the university about $400,000. But in 2016, the 6th Circuit U.S. Court of Appeals reversed the decision, refusing to allow the initial group of laid-off employees to include 279 other laid-off workers from the same year in their suit because they were terminated too many days apart to enact the WARN Act.

The same year the laid-off employees lost on appeal, Zeppos was paid a $2.9 million bonus, just as the university and medical center split. Dr. Jeff Balser was tabbed president and CEO of Vanderbilt University Medical Center, and Zeppos was named to the 11-person governing board for the medical center.

12 Vanderbilt employees earned $1 million or more

Vanderbilt’s 2016 tax return is the most recent available. Private institutions are not required to disclose public records like employee salaries upon request. However, they must file a 990 federal tax return about 18 months after the reported calendar year, which was obtained by the USA TODAY Network.

Twelve Vanderbilt employees earned $1 million or more in 2016, including four in athletics.

Football coach Derek Mason was credited with $2.8 million in total compensation. Baseball coach Tim Corbin earned $2.4 million, including a $1.2 million “one-time” unspecified bonus, according to a university statement.

Men’s basketball coach Bryce Drew, who was hired in April 2016, earned $2 million, including a $750,000 bonus, while on the payroll for nine months that year. Athletics director David Williams was credited with $1.1 million in total compensation in 2016.

Where Zeppos’ pay ranked nationally

Zeppos had not received such a large bonus before 2016. Vanderbilt tax returns show that his base salary rose from $637,288 in 2010 to $1,046,315 in 2016, but his annual bonus never exceeded $374,000 until the $2,899,175 incentive in 2016.

Zeppos’ total package of $4,322,392 in 2016 also included $58,446 in other reportable compensation, $296,424 retirement and deferred compensation and $22,032 in nontaxable benefits.

So where did Zeppos’ 2016 pay rank among the highest-paid private university CEOs? That will not be known until The Chronicle of Higher Education compiles 2016 tax returns and releases its annual report later this year.

But Zeppos would have been the highest-paid CEO of a private university in the nation in six of the previous 10 years, from 2006 to 2015. For example, Wake Forest President Nathan Hatch earned $4 million in 2015 to lead private school CEOs.

Zeppos’ salary was common, bonus was not

The USA TODAY NETWORK already has compiled 2016 tax returns of some private universities. Zeppos’ $1 million base salary was comparable to those presidents, but his $2.9 million bonus dwarfed theirs in the same year.

Texas Christian University’s Victor Boschini earned $3.3 million, including $1.3 million reported as deferred on prior years’ returns and a $1.1 million base. Southern Methodist University's Gerald Turner earned almost $1.4 million, including $736,561 base, a $350,000 bonus and additional compensation.

Southern California’s C.L. Max Nikias earned $2.4 million, including $1.3 million base, additional compensation and no bonus. Former Duke President Richard Brodhead earned $1.4 million in 2016, including $994,475 base, $115,000 deferred and no bonus.

USA TODAY’s Steve Berkowitz contributed to this report. Reach Adam Sparks at asparks@tennessean.com and on Twitter @AdamSparks.

Highest-paid private university CEOs by year

2010: Bob Kerrey, New School (N.Y.): $3 million

2011: Robert Zimmer, University of Chicago: $3.4 million

2012: Shirley Ann Jackson, Rensselaer Polytechnic Institute: $7.1 million

2013: Lee Bollinger, Columbia University: $4.6 million

2014: Jack P. Varsalona, Wilmington University: $5.4 million

2015: Nathan Hatch, Wake Forest: $4 million

2016: *Nicholas Zeppos, Vanderbilt University: $4.3 million

Sources: Chronicle of Higher Education, Forbes.com

*Complete ranking of 2016 private university CEOs not yet available.