A story of personal wealth at the expense of the University kicked up a minor storm earlier this semester. The Sun ran a story Aug. 31 about the salary and bonus of former University Chief Investment Officer James Walsh, along with compensation information on other high-ranking university officials and professors. The story seemed like a real scoop: While the endowment plummeted, a top official got rich. Unfortunately, the story was underreported and its main conclusion was misguided.
The story, “As Endowment Plummeted, CIO Received $400K Bonus,” said that Walsh received $420,000 in “bonus and incentive compensation” during “one of the worst fiscal years in the University endowment’s recent history.” The story cited tax documents indicating the money was paid out to Walsh during the fiscal year 2009.
The story, written by Managing Editor Michael Stratford ’11, was silent on the causal link between Walsh’s performance and the bonus, except for a few general statements by a university spokesman. Deputy University Spokesperson Simeon Moss ’73 said “bonuses are contingent on performance.” The story did not mention the time period over which Walsh’s performance was evaluated for the purpose of the bonus.
Both the general nature of Moss’s comments and the connection Stratford drew in the story would lead the reader down a path to an insidious conclusion: One man profits while the university suffers. But how accurate is that?
After filling in an important gap much of the scoop goes away. As a Sept. 13 letter to the editor from Vice President for University Communications Tommy Bruce notes, Walsh’s bonus was based on the performance of the University endowment in the 2007 calendar year — which was, according to Bruce, “a record-breaking year for Cornell’s endowment performance.” As it turns out, Walsh’s bonus was based on a booming year for the University’s investments.
I thought Bruce’s letter was somewhat confusing, and a follow-up e-mail from Director of Press Relations Claudia Wheatley helped clarify the matter. She explained that Walsh’s performance was compared to market performance for the 2007 calendar year, but that other administrators were evaluated based on the fiscal year, which ends every June 30. “The best we can offer is a rough approximation when comparing the two,” Wheatley told me via e-mail, adding that no University administrator was rewarded for performance during the second half of 2008.
I think this story could have been presented largely as it was, provided the causal link was more clearly reported. There is still a newsy element to be had, if carefully conveyed. For example: If an official was rewarded for a great year of investments, then in the university’s eyes, he earned his bonus. That bonus is probably paid out during the next year. If the investments decline that year, the timing is still worth reporting.
Whether such a sequence is unseemly enough to merit criticism is not for me to decide. It’s the kind of issue that, if reported thoroughly, allows readers to draw their own conclusions regarding the propriety of the University’s bonus payouts.
The Sun’s coverage of the issue did not end with the news piece. An unsigned editorial followed Stratford’s story the next day. The editorial, “Wall Street on Tower Road,” harshly criticized the bonus on the premise of Stratford’s reporting. The editorial also jumped on the unreported, assumed and incorrect link between the down market and the fat bonus. Without that link, again, the pointed rhetoric probably goes away.
This episode highlights the danger of underreporting. I think that Stratford’s piece could have avoided these problems with a slight amount of extra reporting and more thorough explanation. I have been through the tax documents Cornell filed; they are long and complex. Tax law is generally a web of confusing rules and regulations. It’s easy to get bogged down in the details and caught up trying to oversimplify the issue. Unfortunately for a reporter, that’s no excuse.
After the story broke, the aforementioned letter to the editor ran. A correction, written by Stratford, ran immediately below it. The correction detailed the differences between what was reported and how the compensation was actually determined and paid out.
The correction also addressed the editorial, saying that it “relied on incorrect information” in drawing conclusions “about the propriety of Walsh’s compensation.” I’m not sure how this corrects the editorial. The editorial sharply criticized the University’s decision making. I think the correction should have been stronger on this point; I think the editorial should have been explicitly retracted.
When the facts of a story become complicated, as in a tax story, the importance of comprehensive newsgathering is certainly heightened. Complicated topics are difficult to report and difficult to explain plainly in a small space. Going forward, Sun staffers should continue to exercise diligence when forging ahead in stories and not get discouraged by incidents like these. The Sun would certainly benefit from running more so-called enterprise pieces, to balance its heavy coverage of day-to-day events.
Rob Tricchinelli is a third-year student in the Law School and also holds a master’s degree in journalism from the University of Maryland. He can be reached at email@example.com. The public editor column typically appears alternate Mondays this semester.