Florida firm to get $225,000 for aiding UA chancellor hunt

UA Foundation funds being utilized, according to UA System spokesman

Kassandra Salazar (left) speaks Tuesday, April 5, 2016, to a group of 11th-grade students from Heritage High School in Rogers as they walk past Old Main while on a tour of the university campus in Fayetteville.
Kassandra Salazar (left) speaks Tuesday, April 5, 2016, to a group of 11th-grade students from Heritage High School in Rogers as they walk past Old Main while on a tour of the university campus in Fayetteville.

A search firm will be paid $225,000 plus 12% for indirect expenses to help find the next chancellor for the University of Arkansas, Fayetteville, according to an agreement released by the University of Arkansas System.

Greenwood/Asher & Associates will seek payment in three monthly installments, with the first invoice for the amount of $84,000, according to the terms of a contract signed in March.

"We believe the fee is in keeping with industry standards based on expected compensation for the position," Nate Hinkel, a UA System spokesman, said in a statement.

Search firms working to help find executives often charge a fee that's between 30-33% of the first-year earnings of the new hire, said Judith Wilde, a research professor at George Mason University who studies the use of search firms in hiring college presidents and provosts.

UA's previous chancellor, Joe Steinmetz, earned a salary of $464,000 plus yearly deferred compensation of $250,000. He resigned as chancellor last year.

Wilde said, however, that typically the fee is based on the actual earnings in a hire's first year, and deferred earnings may not be a part of that total depending on the employment agreement.

"I would expect it to be under $200,000," Wilde said of a fee charged to help with the search for the next chancellor at UA, the state's largest university by enrollment.

Not all universities use a search firm. The state's second-largest university by enrollment, Arkansas State University, is also seeking a new top administrator.

Jeff Hankins, a spokesman for the ASU System, said in an email that no search firm is being used, and that ASU System President Chuck Welch "hasn't used one in his 11 years for any chancellor hires."

But Wilde said that it has become common for universities to pay search firms to help with searches for new chancellors and presidents.

"In 2015-16, we found that 92% of searches were done with a search firm," Wilde said.

In 2015, when a national search was done that resulted in the Steinmetz hire at UA, the same search firm, Greenwood/Asher & Associates, which is based in Miramar Beach, Fla., charged a fee of $90,000 plus $65,000 in expenses, or $155,000, according to contract records.

Among recent search firm fees paid elsewhere, $160,000 plus fees was charged by firm SP&A Executive Search to assist with finding the next president for the University of South Florida, The Tampa Bay Times reported. In March, the public university with roughly 50,000 students named Rhea Law as its president-elect. She had been serving as interim president since August.

Other factors may contribute to how search firm fees are set, Wilde said, including client expenses.

The agreement with Greenwood/Asher & Associates states that some work to vet candidates would be considered extra costs and not included in the professional fee or indirect expenses.

Under the heading "Client Expenses," the agreement states that "services of a private investigator to perform extensive background checks (i.e. beyond G/A&A's reference checking) and normal, third party background work on 3-5 candidates can be arranged through G/A&A but are charged and billed directly to Client."

After being shown the agreement by a reporter, Wilde noted the extra charges for such "background work."

"We typically have seen in contracts that the search firms don't do everything we would like them to do with due diligence, but this basically said they're not going to do anything," Wilde said.

She added that the agreement states that there could be a search continuation charge, but the agreement does not specify any expected length of time to make the hire.

The search firm was acquired in 2020 by workforce services company Kelly, Wilde said.

The agreement also states that the firm will charge for costs associated with consultant travel and other expenses, including "phone/video/web-based technology outreach, faxes, postage, report reproduction, and supplies." Candidate travel is considered a "client expense."

The listed client in the search firm agreement is not UA or the UA System, but the University of Arkansas Foundation.

Wilde also said she had never seen a search firm list as its client a foundation rather than a university.

"As the UA System has done in the past, we felt that it was prudent to utilize private funds to pay for the costs of the search firm," Hinkel said in a statement. He said the foundation "will not have a role in choosing the next chancellor."

UA System President Donald Bobbitt, with help from an advisory search committee, will select the chancellor nominee, with the 10-person University of Arkansas Board of Trustees making the final decision, Hinkel said.

The agreement notes that the search firm's full fee is payable after 90 days, but no timeline is given in the contract for the actual search.

Steinmetz resigned as chancellor abruptly last year. He is set to receive $175,000 as part of an agreement for him to retire from a UA tenured faculty appointment.

Through March, Steinmetz has been paid nine installments of $14,585.33, according to a document released this week by UA to the Democrat-Gazette in response to a request for public records.

In addition to those payments towards the $175,000 annual salary, Steinmetz also was paid $19,686.42 last July for 234 unused annual leave hours, according to the document.


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