Student Loan Blog : CEO

Bear Stearns Takeover Leaves Business-School Students Scrambling

Student Loan Girl — Mon, 14 Apr 2008 19:13:00 GMT

BearStearns CEO, Jimmy Cayne, seems to have been the only former Stearns employee to make it out of the JPMorgan Chase buyout relatively unscathed — at least in non-CEO terms — walking away with $61.3 million in sold shares. Even though, in his own high-priced executive world, Cayne took his buyout at a massive loss: Just a year ago, his entire Stearns portfolio was valued at almost $1 billion.

Former Bear Stearns employees, along with Cayne, saw the value of their shares plummet 85 percent in the buyout to a mere $10 a share. Bears Stearns shares were trading at about $67 two weeks before the buyout and as high as $170 a year ago.

Now add to the list of people adversely affected by the Stearns debacle, business-school students whose full-time job and summer internship offers from Bear Stearns have recently been rescinded, according to a BusinessWeek article by Alison Damast (“Bear Stearns Rescinds Job Offers,” April 3, 2008).

A spokesman from JPMorgan Chase won’t disclose how many job offers to soon-to-be college graduates and MBAs have been affected by the dissolution of the firm, at least 12 students at New York University’s Stern School of Business have already received their unhappy phone calls from the company.

According to The New York Times, the final count of rescinded job and internship offers will tally in the dozens (“J.P. Morgan Said to Withdraw Bear Job Offers,” April 3, 2008).

Students Left Out in the Cold

When JPMorgan announced its takeover of failing Bear Stearns on March 16, the status of the student jobs and internships was still uncertain. It wasn’t until April 2 that students who were offered positions in the investment banking, sales, and trading and research units of the former company were notified about the fate of their job and internship positions.

Over the next few weeks, as the school year draws to a close, these students will be frantically trying to nail down offers for replacement positions.

“I’m not sure what we are all supposed to be doing now with the few weeks before start-dates, but I would imagine that, like me, the other 25 or so students who were to start as associates are all in a mad scramble to figure out what the future holds,” one student told BusinessWeek.

In the meantime, students who had their full-time job offers rescinded will be allowed to keep their signing and relocation bonuses and will also be able to use JPMorgan’s career-service resources.

And for those students who will no longer be interning with the company this summer, JPMorgan has offered a full 10 weeks’ pay if they find a new summer position with a nonprofit organization instead.

To Fear or Not to Fear the Economy

Although Bear Stearns is the only investment firm so far this recruiting season to withdraw already-extended job offers, fears about the current state of the economy and its effect, in particular, on the financial-services sector have left business-school students and administrators wondering about the security of jobs and job offers with other firms.

To some, the rescinded Bear Stearns offers recall the results of a similar economic downturn in 2001, Damast writes, when several companies that had hired students were forced to scale back.

Tom Kozicki, board president of the MBA Career Services Council, says he believes the Bear Stearns situation doesn’t necessarily foreshadow what lies ahead for the financial industry, but is definitely something business students need to keep in the back of their mind as they prepare for this particularly shaky job market.

“It sounds like the shoe has dropped. I think it’s unfortunate, but I don’t think it comes as a surprise to most people,” Kozicki told BusinessWeek. “The economy is shaky, [Fed Chairman Ben] Bernanke has indicated that he thinks we are going into a recession and I think that students need to be prepared for some uncertainty in the market.”

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By the Numbers: Top 10 Undergraduate Business Schools

Student Loan Girl — Fri, 11 Apr 2008 18:53:00 GMT

Are you a future MBA who sees yourself building the next Trump–like empire or heading up the new 21^st-century tech giant that will finally unseat Microsoft?

If you’re planning on joining the 20 percent of college students who major in business and you’re on the hunt to find the best business school for undergrads that could give you your head start on mega-mogul success, here’s some help.

We’ve got the vitals on the 10 best from BusinessWeek’s list of the country’s Top 50 Undergrad Business Programs for 2008.

The Wharton School of the University of Pennsylvania
Philadelphia

The world’s first collegiate business school, established in 1881, and BusinessWeek’s number-one program for the third year in a row.

Previous Rank: 1
Tuition: $35,916
Full-Time Enrollment: 2,519
Undergraduate Admission Rate: 16%
School Mascot: the Quakers

McIntire School of Commerce at the University of Virginia
Charlottesville, Virginia

Previous Rank: 2
Tuition: $8,690
Full-Time Enrollment: 652
Undergraduate Admission Rate: 34%
School Mascot: the Virginia Cavaliers

Mendoza College of Business at the University of Notre Dame
South Bend, Indiana

The Mendoza College offers undergraduate degrees in accountancy, finance, marketing, and management (with your choice of management track in consulting, entrepreneurship, or information technology).

Previous Rank: 7
Tuition: $35,187
Full-Time Enrollment: 1,626
Undergraduate Admission Rate: 29%
School Mascot: the Fighting Irish

Cornell University
Ithaca, New York

Previous Rank: 10
Tuition: $19,291
Full-Time Enrollment: 708
Undergraduate Admission Rate: 37%
School Mascot: the Big Red Bears

Goizueta Business School at Emory University
Atlanta

Previous Rank: 4
Tuition: $34,336
Full-Time Enrollment: 622
Undergraduate Admission Rate: 44%
School Mascot: Dooley, the Spirit of Emory

Ross School of Business at the University of Michigan
Ann Arbor, Michigan

Combining a liberal arts and business education, the three-year Bachelor of Business Administration program allows you to apply during your freshman year of college and begin the BBA program as a sophomore. If you’re a high school senior, you may be still be able to apply for the Ross BBA program through the Preferred Admissions process.

Previous Rank: 5
Tuition: $12,585
Full-Time Enrollment: 1,069
Undergraduate Admission Rate: 49%
School Mascot: the Wolverines

Marriott School of Management at Brigham Young University
Provo, Utah

Earn your Bachelor of Science in accountancy, management, or information systems.

Previous Rank: 8
Tuition: $3,840
Full-Time Enrollment: 1,616
Undergraduate Admission Rate: 74%
School Mascot: Cosmo the Cougar

New York University Stern School of Business
New York

Previous Rank: 9
Tuition: $36,524
Full-Time Enrollment: 2,335
Undergraduate Admission Rate: 24%
School Mascot: the Bobcats

Massachusetts Institute of Technology Sloan School of Management
Cambridge, Massachusetts

Previous Rank: 6
Tuition: $34,986
Full-Time Enrollment: 246
Undergraduate Admission Rate: 12.5%
School Mascot: the Beaver

McCombs School of Business at the University of Texas at Austin
Austin, Texas

Choose a major in accounting, finance, international business, marketing, management information systems, management, supply chain management, or engineering route to business for your BBA.

According to the McCombs website, more current CEOs in the S&P 500 have graduated from McCombs than from any other public business school.

Previous Rank: 13
Tuition: $8,908
Full-Time Enrollment: 3,969
Undergraduate Admission Rate: 52% (in 2006)
School Mascot: Bevo the Longhorn

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College Presidents’ Salaries Not-So-Slowly Sliding Up the Pay Scale

Student Loan Girl — Wed, 21 Nov 2007 04:09:00 GMT

It costs a lot of money to go to college. It costs even more money to run a college. And it’s costing increasingly more money to pay college and university presidents’ salaries and compensation packages, with many reaching the million-dollar mark.

According to The Chronicle of Higher Education’s most recent survey of executive compensation, salaries for presidents of private institutions has increased 200 percent over the last five years, with 81 presidents making more than $500,000 a year. Eight out of the 182 public institutions surveyed now pay salaries of at least $700,000, a jump from the two who reached that benchmark last year (“Presidential Pay is Increasing Fastest at the Largest Institutions,” Nov. 16, 2007).

In some ways, the life of a growing number of college presidents can be compared to that of a U.S. senator. In addition to their high salaries, these presidents might receive free housing, cars, travel, meals and “gifts” from friends of the institutions.

But with yearly college tuition hikes outstripping both the rate of inflation and increases in financial aid, one of the questions becomes whether rising presidents’ salaries are contributing to rising tuition costs (see our Nov. 4 blog, “Student Loan Debt Is on the Rise”).

A New York Times article by Jonathan D. Glater reports that families and lawmakers are concerned about these unfettered increases, questioning college and university presidents making millions even as students graduate with soaring levels of student loan debt (“Increased Compensation Puts More College Presidents in the Million-Dollar Club,” Nov. 12, 2007).

“The public has lost confidence in the altruistic mission of higher education,” says Patrick M. Callan, president of the National Center for Public Policy and Higher Education, in Glater’s article. “They see higher education as just another institution that’s in it for its own bottom line.”

Salaries on the Rise at Both Private and Public Schools

At private institutions, 81 college presidents earned $500,000 or more in the 2006 fiscal year, an increase of 15.7 percent from the previous year.

NOTE: Because some institutions changed Carnegie classifications, the number of institutions from which these data were collected changed from 670 last year to 654 this year. The statistics do not include special-focus institutions or the compensation of presidents who worked only part of the year.

Data and text courtesy of The Chronicle of Higher Education.

At public universities, the median total annual compensation in 2006–07 for the sample of 182 leaders was $397,349. The following chart shows how many presidents were in each of the $100,000 pay classifications.

Data and text courtesy of The Chronicle of Higher Education.

Schools and Presidents Defend Their Pay

Officials at schools with some of the highest paid presidents argue that “running a large university is increasingly similar to running a corporation,” writes Glater. In fact, the Chronicle points out, more college presidents are coming from corporate environments.

School officials, Glater explains, maintain that generous salaries are necessary both to draw presidents that can operate under the corporate mindset needed “to help build institutional wealth and prestige” and to keep them from defecting to a higher bidding school once they’ve been hired—one-third of public college presidents have no formal written employment contract, according to the Chronicle.

For fear of being ousted as the next Benjamin Lander—the former president of American University who was fired for allegedly requesting more than half a million dollars business compensation for personal expenses—some presidents themselves want to make it clear that not all college heads abuse their compensation packages and expense reimbursements. For some presidents, their greatest yearly expense comes in the form of donations given back to their schools.

In another Chronicle article, reporter Piper Fogg interviewed five college and university presidents about how they spend their money. Although all of them admitted to some personal splurging, they also pointed out the thousands of dollars they give back to the schools they work for (“With All Those Perks, How Do College Presidents Spend Their Money?,” Nov. 16, 2007).

David Hodge, president of Miami University (Ohio), earns $399,005 per year, but has donated more than $100,000 in the last year to create need-based scholarships for his students.

Lois B. DeFleur, president of the State University of New York at Binghamton, might own a Piper Comanche 260C single-engine airplane that she bought over 30 years ago, but the school only reimburses her for mileage at the automobile mileage rate—she pays for the gas, $5 a gallon, out of her own pocket. And out of her $344,500 pay package, DeFleur has donated about $100,000 over the last five years to her school, as well as the $25,000 she received for winning the McGraw Prize in Education.

If college presidents are increasingly expected to operate as CEOs, Hodge and DeFleur certainly differ from typical corporate executives in what they voluntarily give back to their employers out of their own salaries. And while college presidents’ pay is rising rapidly, the Chronicle notes that compared with the salaries of corporate CEOs, college executive salaries still lag far behind.

As long as colleges and universities stay on their current path toward functioning as corporations, presidents’ salaries will most likely continue to climb—it will be for the schools, the students, and the public at large to see if they get the corporate-level college management that corresponds to the corporate-level pay.

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