Reactions: Are Presidential Salaries Out of Whack?

Earlier this week, The Chronicle reported that the salaries of public-university leaders continued to rise in 2007-8, with the median pay for chief executives in the survey reaching $436,111. (The highest-paid president, E. Gordon Gee at Ohio State University, made more than $1.5-million, the only president in the survey to top the million-dollar figure).

Although salaries of private-college presidents are considerably higher — and the rate of increase in the public sector has slowed, with some presidents even posting a decline in compensation — the latest figures have sparked outrage in these tough economic times when many campuses face extreme budgetary crises.

Are university presidents’ salaries too high? Or are they compensated appropriately? What constitutes a fair salary? The Chronicle asked a group of scholars and experts what they thought.

Christopher Newfield, professor of English at the University of California at Santa Barbara:
Public universities should not have second- and third-class resources by comparison to their private kin. So public-university presidents should not have systematically lower salaries. Many public-university presidents manage larger and more complicated institutions than do their private counterparts. They do it with less money to go around. They have genuinely tough jobs, and that needs to be factored in.

Yet it’s hard to see the big payoffs from the big salaries. This well-paid generation of public-university presidents has presided over the largest per-student public-financing decline in modern American history. If we wanted real performance pay, we would tie presidential salaries not to private fund raising but to the current level of state support. If a president is there while state financing is cut to 1999 levels, then the presidential salary gets rewound to the same time and place.

The real question for presidential pay is this: What does it do to the presidential ability to imagine and rebuild public higher education? A president making $50,000 to $100,000 per month is insulated from the struggling world his decisions create. A president who measures success in private donations has to answer to private donors. A president who thinks a public university should look like a business may spend 10 years—true story—growing the ranks of senior staff members four times faster than the ranks of professors. A president who is dependent on industry winds up speaking in the language of advertising.

Public universities desperately need to be readied for takeoff, for something that inspires their publics, for their true role in the salvation of humanity and of the natural world. Public universities need to find presidents who care about these things far more than they care about the marking to market of executive salaries.

Stephen Joel Trachtenberg, president emeritus and university professor of public service at George Washington University:
Few subjects in higher education arouse as much ire as does the discussion of presidential salaries, with the possible exception of decisions to eliminate football as a competitive sport.
At most colleges, a president’s salary is set after consideration of five leading factors: the size and complexity of the institution, overall years of experience and talents of the president, performance in office (meeting goals and expectations), whether the school is independent or state financed, and competitive market forces. Other considerations can also affect the decision, for example: whether the governing board wishes to signal pleasure or displeasure with the president’s performance, the number of years the president has held her current post, and the location of the college (urban high-rent district or not).

The competitive marketplace for English professors is English departments at other campuses or a few jobs in the private sector (very few opportunities); likewise, for a professor of philosophy or classics. But a professor of law or medicine has the option to work in the private sector, often at a salary higher than many found in the academy—and the salaries paid to those faculty members reflect the influence of outside factors. The situation with presidential salaries and the compensation of senior administrative staff is similarly influenced by "exit options." The CFO of a university could also work in private industry. The vice president of medical affairs could run a major city hospital or research institution.

That being said, symbolism is an important element of management: In good times, when everyone gets a raise, few begrudge the president’s raise. But when times are tough, then those at the top of the pay scale should seriously consider asking that their own compensation not rise any more than any other group on campus, if at all.

When belts are being tightened on all sides of the campus—few or low raises, restrictions on travel grants, layoffs of support staff, reduction of research dollars—then administrative salaries should not be out of line with the rest of the campus’s expenditures. Shared sacrifice makes difficulties a little easier to bear.

Gordon Winston, emeritus professor of economics and political economy at Williams College:
I have little doubt that some university presidents are caught up in the same salary-as-self-respect lust as the bankers we’re hearing so much about these days. Sure, they run complicated and demanding organizations and most of them could have made more money in the for-profit sector, but that’s not where they are. They’re part of a community whose mission and dedication and satisfactions have to do with something more than, and different from, profits. And whatever their impact in the world at large, outsized presidential salaries have corrosive effects within their communities. There once was an idea that a college’s president should make about twice what its average full professors did (as professors, not as clinical practitioners or football coaches or consultants). That seems to me a reasonable and community-based target for boards to aim at. More than that suggests presidential values inconsistent with their jobs.

Ananya Roy, professor of comparative urban studies and international development at the University of California at Berkeley:
The debate about pay packages of public-university chief executives is a distraction. The more urgent question at hand is whether or not these executives are willing and able to wage the struggle necessary to maintain the American public university. That requires more than the sacrificial gestures of these executives—the self-imposed pay reductions, the payback of bonuses. It requires much more than the usual repertoire of fund raising from donors and alumni, much more than the efforts to remake universities as "lean and mean" teaching and research machines.

The struggle for the American public university requires visionary leadership that is able to inspire ordinary Americans as well as our elected representatives to invest in our collective future. It means making a convincing case as to why public universities, with their mandates of access and inclusion, remain an important pathway of socioeconomic mobility, especially in the context of growing income and wealth inequality in America. It means demonstrating how and why the knowledge produced in such universities serves the public interest. It means sparking and leading a national debate about policy priorities—after all, how much do we as a nation spend on the wars in Iraq and Afghanistan?

As an alumna and member of the faculty of the University of California, I do not begrudge our chief executives their salaries. But I want to see them in the trenches of Sacramento and Washington—alongside faculty members, students, and staff members—making the case for state financing. I want to see them strike alliances with other public-university systems that are facing cuts and create a nationwide movement around educational justice. I want to see them forge solidarity with California’s community colleges and schools, the gateway institutions that face a fate even more fragile than that of well-known public universities. I want to be inspired.

James M. Weaver, chair of the board of trustees at Gettysburg College:
As a board chair of a private institution, I don’t think that presidential compensation packages are out of whack. Surveys like this generate a lot of attention, and often identify outliers, but in my experience current compensation levels seem commensurate with the immense responsibility of the job of a college president.

Every week, I have at least an hourlong conversation with Gettysburg’s president, and through that conversation I get a real feel for what is going on in her world and on the campus. I marvel at all of the different hats she wears, the number of difficult decisions she makes, the hours she puts into the job, day after day. The position is incredibly intense; it makes sense that compensation is set based on the totality of the role. Compared with what I see in industry and finance, the compensation seems, on the whole, appropriate.

In the business world, where the profit motive is present, the success or failure of a company to achieve a profit and thus compensate its CEO accordingly is understandable. We have an easier time tying compensation levels to the successes of the business entity. In the not-for-profit sector, the connection isn’t as direct, but that doesn’t minimize the complexity of the leader’s role. In either case, the right leadership is essential to the institution’s success; without strong and able presidential leadership there will be significant impact on the reputation, staffing, and leadership of the institution.

Roger W. Bowen, former president of the State University of New York at New Paltz:
In 2001, only six public-university presidents earned a half-million dollars or more in salary; and now in 2008-9 we learn that 58 public "chief executives" (I prefer the term "president") have joined this elite class of educational leaders.

Most college presidents work hard, but probably not any harder than a junior tenure-track faculty member who must juggle teaching, research, advising, committee, service, and family responsibilities as expertly as presidents must deal with staff members, faculty members, students, alumni, governing boards, donors, legislators, community officials, and the local Rotary Club, not to mention budget deficits, deferred maintenance, and campus parking. In other words, the scope and range of the president’s responsibilities exceed those of faculty members who may log just as many hours at work. When something goes wrong on campus, it is the president who must deal directly with the problem and who is usually the one held accountable.

Presidents do in fact deserve to earn considerably more than faculty members, but the question is: How much more? Should the president’s salary be as much as five times greater than what the average full professor earns? And 10 times greater than what the average assistant professor earns? Governing-board members should be required to answer such questions, not from the perspective of the corporate world but instead from the perspective of university overseers who have fiduciary and ethical responsibilities for an institution’s welfare and its employees’ morale.

I have never met a president who does not believe it is an honor and a privilege to serve his or her campus. Nor have I met any presidents who feel they deserve less than what they are being paid. The position should be about that privilege to serve and not about presidential privileges.

Raymond D. Cotton, vice president of higher education for ML Strategies LLC and a partner in the Mintz Levin law firm:
The compensation of college and university presidents is a direct reflection of supply and demand in the marketplace. With many members of the baby-boomer generation retiring from presidencies, there is a growing demand for people who can do these jobs well. At the same time, there is dwindling supply of men and women within higher education who have the appropriate experience, skill, and qualifications and who are available to employers and boards of trustees. As a result, boards are often in a scramble, vying against one another for the remaining available talent. Within that context, the level of compensation being offered to most college and university presidents today is not unreasonable.

Moreover, unlike tenured professors, who have a guaranteed job for life, presidents have a limited employment term and often serve at the will of the board. Consequently, those who forfeit the job security associated with many other positions in higher education, who are able to perform these difficult jobs well and undertake the inherent risks of a presidency, should be appropriately compensated.

Admittedly, the nonprofit higher-education sector has a few presidents whose compensation makes them outliers vis-à-vis the marketplace. However, in general, presidential compensation appropriately reflects the existing demand by boards, labor-market shortage, and the high risks that come with the position.

Presidents often tell me that the presidency is a 24/7 assignment. As a consequence, personal lives and sometimes health can suffer a great deal. The delicate balancing act that presidents must perform in an effort to satisfy the various constituencies of an institution—the board and the faculty to the students and alumni—is a daunting task.

Finally, it ought to be noted that college and university presidents are sometimes not even the institution’s highest-paid employee. Those earning more than the president are some professors at medical schools, athletics directors, or coaches.

Jane Buck, immediate past president of the American Association of University Professors:

As the recipient of four degrees from the University of Delaware and a longtime resident of the state, I am appalled at the unconscionably astronomical salaries of the presidents of my alma mater and of Delaware Technical and Community College. That said, I realize that the job of college and university presidents is extremely demanding and deserving of reasonable compensation, perhaps in excess of the most highly paid faculty member. The university’s president, Patrick T. Harker, has already initiated several creative projects and promises to be an effective fund raiser, and should be rewarded. But total compensation exceeding $800,000? The word that immediately comes to mind is "unseemly."

As The Chronicle article points out, several of the most highly paid presidents have refused salary increases and bonuses, or have returned large portions to their institutions. Laudable as such behavior is, it does not address the fundamental issue of appropriate levels of compensation. It would be more efficient to institute a rational salary schedule ab initio. My own bias and that of some of my colleagues in the AAUP—not, I hasten to point out, official policy—is that presidential pay should be capped at no more than twice that of the median salary for a full professor.

I should be most interested in seeing what percentage of courses are taught by contingent—that is, untenured and untenurable—faculty members at the institutions paying the highest salaries to their top administrators (and football coaches, but that’s another story). The corporatization of higher education—exemplified by rising tuition, corporate-style salaries and bonuses for administrators, and references to presidents as CEO’s and students as customers—could, if not reversed, signal the demise of the best of the academy.

Clifford M. Kendall, chair of the University System of Maryland Board of Regents:
In today’s challenging economic climate, when our state is slashing budgets and freezing salaries, and the private sector is cutting jobs, the presidents of our institutions of higher education should not be receiving pay increases, except in the most unusual and compelling circumstances. Our chancellor and presidents have previously taken the lead in independently adopting and endorsing that position. It has made the job of the regents, who ultimately set salaries in Maryland, relatively easy.

We know these are extraordinary times. Questions of executive compensation are always controversial, and never more so than in a year of economic upheaval. The State of Maryland just today announced actions to close a budget shortfall of $2-billion.

The dilemma the regents wrestle with is how to ensure the quality of Maryland’s academic institutions for the future, and how to attract and retain the best possible leadership for those institutions. A college, university, or system president or chancellor is not only the leader of an extraordinarily complex organization, with annual budgets in the millions and, in some cases, billions of dollars. College leaders, especially those in Maryland, are critical partners whose work directly contributes to the economic vitality of the state and the mid-Atlantic region. They are academic role models, and we have charged them with leading and guiding our children and grandchildren. Many of us have attained our own academic and professional dreams and aspirations under their tutelage, directly or indirectly.

I have been a corporate CEO in a company with 4,000 employees, which basically answered to three constituencies, and it simply does not compare to the challenges that face a college or university leader. In academe, the president or chancellor is pulled by constituencies in the double digits. The balancing act is exceedingly difficult and requires adept leadership.

Given that Maryland is blessed with a group of outstanding academic leaders, it is important during periods when there is not economic stress to provide them competitive salaries so that we can retain and attract the best talent available.

Robert W. Tucker, president of the consulting company InterEd:
Some wags see the collapse of the financial sector as evidence that university presidents are paid too much; most look to average salaries to determine a correct dollar value. Both approaches produce bad outcomes. A proximate cause of the financial crisis was an egregious misalignment of incentives, and no one thinks averages should have been consulted to set bankers’ salaries. The more bankers damaged the economy, the more money they made.
University presidents derive some compensation for behavior appropriate to their job (albeit from sloppy metrics); other very important portions of their job go unnoticed and unmanaged, often squandering millions of dollars. Like the bankers, incentives are misaligned, and knowing what the other guy earns doesn’t align them.

Presidents temporize while for-profit and a few independent colleges grab millions in revenue from under their noses. These losses have a nasty ripple effect. Interlopers ignore expensive programs that lose money. They steal high-volume, high-profit programs, leaving Big State U with declining offsetting revenue to support expensive, unprofitable, mission-driven programs.

To compete effectively, universities must deliver programs needed in the way the market wants them. Unfortunately, presidents lack the leadership skills necessary to compete. One reason (of many) is that they work with 1920s accounting models that lack information to manage market share, revenue, margin, etc. Lacking basic tools of management, one might hold presidents blameless, until one recalls how easily they finance new buildings. For-profits have grown to 10-percent market share exploiting these weaknesses. Four large for-profits produced $6.8-billion in 2009. At least half was share taken from other colleges.

There are no requirements to report true presidential performance. If there were, a less attractive picture would emerge. One popular president (good athletics) lost $7.5-million to the competition in one year! Would the legislature rethink his compensation if it knew he allowed millions to slip into the hands of out-of-state interests?

The three-step solution: Stop talking about average salaries. Create the information systems to manage enterprise performance. Align incentives and compensation. A president who snatches millions from would-be interlopers probably deserves a handsome salary.


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