When Penn State football coach James Franklin’s new $70 million contract was announced on Nov. 23, it was a surprise to some on the 36-member Board of Trustees. The full board, which makes major decisions about the university, never voted on the contract, and some board members told The Epoch Times they knew nothing about the contract until it was announced publicly.
The board’s Subcommittee on Compensation, just five people, committed Penn State to what amounts to roughly $90 million in obligations to Franklin over the next 10 years, and members of the full board feel they should have had a voice in the decision.
The committee does have the authority to approve compensation for certain tier level employees, including all Tier IIA employees. Penn State only has four employees classified as Tier IIA: The Vice President of intercollegiate athletics, the men’s and women’s basketball coaches, and the football coach, in this case, James Franklin.
The subcommittee was formed in 2013 and originally was to “consider and report or recommend to the Board of Trustees on matters pertaining to: (1) Changes to the executive compensation philosophy and strategy; (2) Significant changes in executive compensation and benefit programs and policies,” the original committee bylaws say. In other words, the subcommittee made recommendations to the full board which would then vote on whether to approve the recommendation.
Some board members are questioning when the subcommittee gained the authority to negotiate and approve large contracts like Franklin’s without board approval. A search of board minutes did not immediately reveal a time when the board approved giving that authority to the committee.
The five members of the Subcommittee on Compensation are Kathleen Casey, Daniel Delligatti, David Kleppinger, Mary Lee Schneider, and Matthew Schuyler, none of whom responded to emails seeking comment. Penn State’s media relations, and Franklin’s office did not respond. At least three board members spoke only on the condition of anonymity, but provided public documents that help unravel the board’s innerworkings.
The subcommittee’s operating guidelines require the subcommittee to have open communication with the full board, regularly report its activity, and record it in minutes. But there is no evidence of discussion about Franklin’s contract recorded in the Board of Trustee minutes. “As stewards of university resources, we are entitled to know what is going on,” one board member said. “Having the full board be able to ask questions and contribute to the conversation may redirect the committee.”
Board members say they don’t have a beef with Franklin, but with the lack of transparency in the process, and they intend to look into that process going forward.
Franklin’s contract was good until 2025 but in the summer, he hired a new agent, Jimmy Sexton. Soon there were rumors that other schools wanted to hire Franklin. Similar rumors surfaced just before Franklin’s other contract re-negotiations.
The new contract is good through 2031 and guarantees Franklin $7 million a year, plus an annual $10,000 a year automobile allowance; an annual $500,000 retention bonus; an annual loan of $1 million for life insurance; incentives related to wins of up to $1 million a year; and up to 55 hours a year of private use of an airplane for personal use.
And here’s what upsets some board members: if Penn State terminates Franklin without cause, it must give him the base pay, supplemental, and life insurance loan for all remaining years on the contract. If Franklin decides to leave in 2022, he would have to pay a $12 million contract buyout. The buyout decreases in time. In 2024 he would have to pay the university $2 million if he left, and by 2026, $1 million. Some board members say another football program may think nothing of paying that buyout for him, meaning the university is on the hook for 10 years, but by 2024, more rumors may surface of other schools wanting Franklin, prompting another renegotiation, or making it easy for him to leave. These board members say they would have advised the subcommittee to write contract terms that would avoid such a scenario.