NEW CONTRACT DETAILS

Mike Gundy's updated contract has taken some power from him — a change he brought on himself

STILL WATER—Mike Gundy's turbulent offseason ended with a new contract, highlighted by a pay cut, which Oklahoma State athletic director Mike Holder said was Gundy's suggestion.

The contract, which was obtained by the USA Today network, has a few other changes as well.

In previous years when Gundy received a raise or had other changes made to his contract, an amendment to the existing contract was made. But in this instance, OSU issued an entirely new contract, even though most of the language remained unchanged.

Here's a look at the three biggest alterations in Gundy's new contract:

Force majeure

The force majeure is essent i a l l y a n u n f o r e s e e a b l e circumstances clause in the contract that gives the university the ability to adjust a contract based on conditions out of its control, primarily those that significantly impact t he a t hl e t i c de pa r t ment's revenue.

It is a common clause in football coaches' contracts around the country, though it has not been used at Oklahoma State before being added to Gundy's new contract. Athletic director Mike Holder said in July that the clause will be more frequently used in OSU contracts going forward.

Compared to that of other coaches' contracts, the language used in the force majeure clause in Gundy's contract is somewhat unique.

I t s t at es t hat i f ci r cumstances make t he contract impossible or impracticable to execute, or causes a “significant decrease in athletic department r evenue” t hat the athletic director — in this case, Holder — has the right to reduce Gundy's compensation with 24 hours notice.

The clause states occurrences like fires, tornadoes, riots, war and acts of God, but also lists “epidemics, pandemics, quarantines.”

Yet here's where the force majeure l a nguage i s most unique. The athletic direct o r wi l l h a v e “u n i l a t e r a l discretion” to determine the reduction to Gundy's compensation and duration of his contract. However, that percentage of reduction “will be no greater than the percentage reduction and duration” of Holder's contract.

So Holder has the ability to cut Gundy's salary based on a pandemic or any other cause of significantly reduced revenue to the athletic department, but Holder must cut his own salary an equal percentage.

The pay cut

Gundy took a $1 million per year pay cut, bringing his current annual salary down to $4.25 million. The sources of Gundy's salary are defined by three parts of his contract.

Technically, Gundy — and all t he f ootball coaches on staff — has two contracts; an employment contract and a talent and personal services contract.

Gundy's employment cont r a c t wi t h t h e u n i v e r s i t y pays him $500,000 per year. That amount did not change. Through his talent and personal services contract, he receives $600,000 per year into retirement plans. That amount al s o r emained t he same.

The $ 1 mill i on cut came from the primary source of his salary, which is the compensation section of his personal services contract. That now pays him $3.15 million per year. That segment of the contract also includes his annual retention raise of $125,000, which is activated if he is still employed on Jan. 1 each year.

Buyout changes

The contract includes three types of buyouts if the contract is terminated: One for Gundy leaving on his own, one for Gundy being fired with cause and one for Gundy being fired without cause.

E a c h o f t h e t h r e e w a s affected in some way by the changes to the contract

Should Gundy l e a v e , he would owe the university $4 million in his buyout, which had previously been $3 million.

The university buyouts for terminating the contract were changed with t he contract being shortened from a fiveyear rollover contract t o a four-year rollover. In essence, Gundy always has a four-year contract, because an additional year is added at the end of each season.

But the loss of the fifth year impacted what the university is responsible for, should Gundy be terminated.

If Gundy is fired for cause, t h e u n i v e r s i t y o we s h i m $500,000 for each year, or portion of a year, remaining on the contract. So, with his previous five-year deal, that would have been $2.5 million, but is now reduced to $2 million.

The university's buyout for firing Gundy without cause decreased far greater. Under the previous contract, Gundy was entitled to 75% of what he was owed by the entire remaining contract. That resulted in Gundy's buyout for the previous contract equaling roughly $17 million.

The new contract reduces that percentage to 50%, and with the one-year reduction in the length of the contract, plus the salary cut, the university's responsibility in a buyout is cut nearly in half.

All the changes have put the university in a more favorable position in the future should a coaching change need to be made.