The deal Erickson signed could see him get raises based on his annual evaluations. The contract also calls for the use of a university car and "standard benefits" for school executives.
Erickson intends to step down at the end of the contract, spokeswoman Lisa Powers said. He first revealed his intentions in an interview Tuesday with the Pittsburgh Post-Gazette, university spokeswoman Lisa Powers said.
Erickson was promoted from provost to president on Nov. 9 after the resignation of Graham Spanier in the aftermath of child sex abuse charges against retired assistant football coach Jerry Sandusky. In a statement, Erickson said he was grateful for the trustees' support and proud of the university's "heritage and accomplishments in teaching, research" and public service.
The announcement about the salary came just a day before Erickson embarks on a three-day tour of meetings with alumni, including two in Pennsylvania and one in New York. The school has previously fought efforts to force disclosure of its employees' salaries, but revisions to the Right-to-Know Law enacted in 2008 require it to annually report the salaries of all officers and directors, as well as the other highest-paid 25 employees.
Spanier, who was president for 16 years, made about $813,000. He was one of the nation's longest-tenured college presidents. A survey released in April by The Chronicle of Higher Education found Spanier was fifth highest-paid public college president in the country.
Erickson was Penn State's executive vice president and provost - or chief academic officer - for 12 years prior to being appointed president. The trustees also fired Hall of Fame football coach Joe Paterno the same night amid mounting criticism that school leaders should have done more to prevent alleged abuse.
Sandusky waived a preliminary hearing last month and has denied the charges. He is awaiting trial.
Spanier, who holds tenure in the university's colleges of liberal arts and health and human development, is on a sabbatical. A school official has said he could resume teaching later this year if he was interested.
The school said Erickson had no plans to move into Schreyer House, the official residence of the university president. It was unclear whether Spanier was still getting paid or had moved out of the home.
Spanier had 75 days following his Nov. 9 resignation to vacate the home, Powers said. The building otherwise will continue to be used for special events and other Penn State-related business.
Erickson had promised shortly after being named president he would reveal his salary and other terms of his employment as part of a renewed focus on transparency at the university.
In the statement, trustees Vice Chairman John Surma cited Erickson's extensive background in business, research and graduate education.
"He understands our community, our Commonwealth, our financial outlook and the challenges we face as we move forward with our university's land grant mission of education, research and outreach," Surma said. "His record of achievement is impeccable."
Penn State last week hired Paterno's successor, New England Patriots offensive coordinator Bill O'Brien. His five-year contract included base compensation starting at $950,000, with a 5 percent increase each season. O'Brien will also collect another $1 million a year for radio and television work and a $350,000 Nike contract. He could earn an additional $200,000 annually in performance incentives.
Two former administrators are also awaiting trial on charges in connection with the Sandusky allegations. Athletic Director Tim Curley was placed on administrative leave and Gary Schultz retired from his interim vice president post after being charged with lying to a state grand jury investigating the case and failing to report a 2002 allegation.
Curley and Schultz have denied the allegations. Their cases were sent to trial following a preliminary hearing last month.
Alumnus and former football player and wrestler David Joyner suspended his position on the trustees in November to take over as Acting Athletic Director. Joyner said Saturday that he had no plans to leave in the near future, and that he would remain as long as Erickson wanted him to stay.