University of Tennessee Head Football Coach Phillip Fulmer has been awarded a one-year contract extension and increased compensation following his eighth 10-win season and the largest bowl victory margin in school history. UT President John Petersen and Athletics Director Mike Hamilton made the announcement Tuesday.

The new agreement increases Fulmer's annual total compensation package to $2.05 million and runs through Dec. 31, 2011. Fulmer's base salary rises from $275,000 to $325,000. In addition, Fulmer receives monies for radio and television commitments of $800,000, an equipment and apparel fee of $625,000, and an endorsement and appearance fee of $300,000.

"The Volunteer football program is one of our major assets, and we are indeed fortunate to have Coach Fulmer lead it," Petersen said. "Everyone knows he is among the very best coaches in the nation, but more importantly he is an outstanding representative of the University of Tennessee. The Board of Trustees and I are happy that he will be here for the next seven years."

The new contract also includes a definitive incentive package to reward Fulmer for the team's successes. The clause would pay Fulmer only the highest bonus allowed based on the achievement of the team. The level valuation is as follows: $37,500 for a non-BCS bowl, $50,000 for SEC Eastern Division first place tie, $75,000 for SEC Championship game appearance, $100,000 for SEC Championship or appearing in a BCS game, $150,000 for appearing in the BCS National Championship game and $250,000 for BCS National Championship game winner.

In Fulmer's previous contract, incentives were a percentage of his base salary, whereas in the new contract incentives are at a flat rate.

"I am grateful to President Petersen, the Board of Trustees, our Athletic Director Mike Hamilton, and Tennessee fans everywhere for the confidence they continue to show in me and the opportunity to represent UT," said Fulmer. "I can honestly say that I have the best job in America, serving as an ambassador for the state and university that mean so much to me. There is no place I'd rather be than on our campus and on our sideline teaching our young men.

"I'd also like to thank all our dedicated coaches and our talented football staff. To run a quality football program, it takes skilled professionals in the training room, the weight room, the office and the equipment room. No one in college football has a staff as skilled as ours."

Tennessee finished the 2004 season with a 10-3 overall record, claiming the SEC Eastern Division title. Since 1997, no team has won or shared more divisional titles than Tennessee with five (1997, 1998, 2001, 2003 and 2004).

"Not only did Phillip and his staff do a great job this year with one of the youngest teams in the SEC, but he continues to represent the university in a positive manner," Hamilton said. "In a world where coaching changes appear to be coming more frequently, Phillip brings a tremendous amount of stability to our program and we feel Tennessee football is well-positioned for the future."

The contract includes two clauses — a buyout should the university choose to cancel the contract with Fulmer and a penalty clause should Fulmer choose to leave the university for another coaching opportunity. The university's buyout is the number of years remaining on the contract times the base salary plus one year of radio and TV endorsements and an additional $1 million payable over a 48-month period. Fulmer's penalty would be $1 million payable over the remaining years of the contract.

During his tenure at Tennessee, Fulmer has recorded a 123-31 career record, winning nearly 80 percent of his games. His record leads all active coaches with at least 10 years of experience and he is the ninth winningest coach in league history.

All funding for the athletics department, including coaches' salaries, is from monies generated by athletics' resources and not from appropriated funding by the state of Tennessee or other university-related revenues.

Since Fulmer has been at the helm of Tennessee's football program, UT has seen donations rise from approximately $4 million in 1992 to $25 million in fiscal year 2004.

"Much of the funding for our 20 sports is generated through the football program," Hamilton said. "Coach Fulmer's success on the field has allowed these programs the opportunity to be competitive."