"Bill Carmody is under contract to be our men's basketball coach, and has the full support of the athletic department and University," Phillips said in a statement.
Northwestern finished 19-14 on the season and made its program-record fourth-straight NIT appearance, but failed to reach the NCAA tournament again.
"I want to be clear about our expectations: While we're in a better place today than we've ever been, it's not enough," said Bill Carmody. "We intend to compete for Big Ten championships and achieve NCAA tournament success."
This season, the Wildcats awaited their fate on Selection Sunday, but received disappointment. It was the closest the program had ever come to reaching the tournament, but it wasn't enough.
Carmody's overall record stands at 179-190, but he has helped Northwestern reach a consistent level of winning during the past four seasons. His record since the start of the 2008 season is 76-54. However, NU still has yet to get over the hump. The postseason disappointments have put Carmody on the hot seat.
"We're proud of what we've accomplished these past four years, but we're disappointed in how this season finished," Carmody said. "Expectations were high and they should continue to be."
Next year's Wildcats are loaded with talent. Senior-to-be Drew Crawford will lead a new-look core next season. Guard Jershon Cobb showed his potential toward the end of the season. Carmody also brought in three-star forwards Sanjay Lumpkin and Kale Abrahamson, along with center Alex Olah.
Phillips gave careful consideration to his decision, but believes Carmody is the right coach to lead the 2012 Wildcats.
"We had another solid season competitively, but let me be perfectly clear: we are not satisfied. We are, however, optimistic that our program will continue to get better on the court while always maintaining a standard of excellence in academic success, NCAA compliance, social behavior and the development of young men," Phillips said.
Carmody is excited and optimistic about the program's direction. He hopes to take Northwestern to the Big Dance next season.
"We receive tremendous support from the University, President Schapiro, Jim and the athletic department," said Carmody. "There is no ceiling on our program and there are no significant barriers holding us back. Next season already has begun and we can't wait to continue our work."