Published: November 02, 2008 09:52 am      

NMC wants $1M insurance policy on president

Benefit would be highest among community colleges

TRAVERSE CITY -- Northwestern Michigan College officials propose doubling President Tim Nelson's life insurance benefit to $1 million, a perk that would cost taxpayers thousands of dollars extra in premium costs.

The would-be benefit is among several possible alterations to Nelson's contract, and far outdistances life insurance benefits provided to top administrators at Michigan's other community colleges.

Trustees are expected to discuss Nelson's contract at a study session at 8 a.m. Monday at NMC's Oleson Center.

If the $1 million policy is approved, Nelson's beneficiary would split the payout with NMC upon his death, according to a draft contract.

No other community college president in Michigan has a life insurance policy that comes close to $1 million. Nelson's current $500,000 policy outpaces that of Lansing Community College's president, who's covered with a $400,000 policy, the second-highest among state community colleges.

"It may be something that catches everybody's eye because of the amount, but it's not an expensive benefit," said Walter Hooper, NMC board chairman. "I care more about what we're doing than other community colleges. We want to be comparable, but we may not be comparable in every category."

NMC trustees on the president's contract committee said they haven't decided whether to recommend the increase.

NMC currently pays $1,375 per year to Great American Life Insurance Company in Ohio for Nelson's $500,000 life insurance policy. Early estimates from Prudential Financial for the $1 million policy call for annual payments of $8,350 for five years, followed by $3,350 payments for each of the next 15 years, said Christine Keenan, NMC coordinator of benefits and human resources.

The big hike in premiums is due to Nelson's history with cancer, Keenan said.

Nelson was diagnosed with prostate cancer in 2006 and underwent surgery that year, but today is cancer-free, he said.

Nelson said he proposed the idea to double his life insurance policy and name NMC as a 50 percent beneficiary. Many college presidents have policies that pay only their beneficiaries, Nelson said.

"It's not a critical issue. It's a question of how the college could be prepared for undesirable outcomes," Nelson said.

NMC Trustee K. Ross Childs chairs the president's contract committee and said the possible life insurance hike is to protect both Nelson and NMC. The potential $500,000 payout to NMC would be used to find a new leader if Nelson died while president, Childs said.

"It was a topic of discussion about whether we could look to provide protection to the college and to Tim," he said.

"If I should die, this is a very inexpensive way for the college to have some money to pay for my replacement," Nelson said.

Nelson's salary for 2008 is $164,035, up from $102,000 per year when he was hired in 2001. Annual cost-of-living increases are built into his existing contract, but no additional base salary jumps are scheduled under the proposed contract.

Trustees also are considering another change to Nelson's contract: he would continue to receive 25 vacation days per year, and would be allowed to carry over an unlimited number of vacation days from year-to-year.

Nelson currently has 70 days of accrued vacation days and under a proposed contract change, would be allowed to cash in up to 30 vacation days per year at 65 percent of the value.

Possible contract changes also would reduce severance pay if Nelson is fired and allow him to cash in unused vacation days if he quits, according to NMC documents.

NMC trustees last approved revisions to Nelson's contract in February 2006, when they removed an annual bonus system. The contract does not expire until June 2011 and this is the first time in more than two years that changes will be considered.

Survey

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* College currently searching for a new president and figures given are for the most recent former president.