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Lofty Salaries in the Ivory Towers; Are university presidents overpaid, or does the compensation appropriately reflect their wide range of management, recruitment and fund-raising duties?

JUNE 23, 2014

Lofty Salaries in the Ivory Towers

INTRODUCTION

Despite continued talk in academia of austerity – resulting in program cuts, loss of tenure-track jobs and increasing reliance on part-time adjuncts – the salaries of university presidents have reached record levels. Recently, at the University of Alberta, 56 Canadian academicsapplied for the $400,000-a-year job of the departing president in groups of four to highlight the pay disparity.

Are university presidents overpaid, or does the compensation appropriately reflect their wide range of management, recruitment and fund-raising duties? 

End the Era of the C.E.O. College President

Kathleen Cawsey is an associate professor of English at Dalhousie University in Nova Scotia, Canada.

JUNE 23, 2014

When a colleague posted the job ad for the president of the University of Alberta, I joked that we could split the job four ways and she’d still triple her salary. So we applied – with over 50 other academics – in groups of four.

We wanted to highlight the gap between the rhetoric of austerity at universities such as the University of Alberta, and the increasing costs of university administrations across North America.

First, the increasing costs of administration come on the backs of adjuncts and students. Adjuncts – contract academic staff hired on a temporary basis with low salaries, no benefits and no job security – are taking over the bulk of university teaching. Tuition rates (and student debt) are skyrocketing. Since adjuncts are not tenured, the trend also has implications for values of academic freedom and integrity.

Second, C.E.O.-like college presidents are counterproductive to their own austerity measures. How can staff support cost-cutting when the administration splashes out? How can faculty accept program cuts in the same week they receive emails about newly created executive positions? How can students believe in large Internet courses or other trendy innovations, when the person advocating them doesn’t teach a single course?

Third, the salaries of presidents are symptomatic of a larger trend: the corporatization of academia. Money goes toward specialized projects and centers, according to the priorities of corporations, at the expense of the core mission of universities. “Centers for Excellence” are built while grant money for basic research is cut; “centers for teaching and learning” employ more and more people, while departments cannot replace tenure-track faculty to teach core undergraduate classes.

If the compensation for university presidents should reflect their credentials, backgrounds and the jobs they do, then surely the compensation for the many adjuncts they employ should likewise reflect their credentials (Ph.D.’s), backgrounds (years of teaching) and jobs (the same work as tenured faculty). If universities are the “marketplace,” we should be able to decide what cost the marketplace will bear. The leaders of universities, in these times of austerity, need to lead by example.

 

Colleges Must Compete to Attract the Best Leadership

Raymond D. Cotton is a partner in the Mintz Levin law firm. He represents higher education and other nonprofit boards of trustee and executives.

JUNE 23, 2014

By and large, college presidents are not overpaid in relationship to their responsibilities and the compensation market place.

College presidents today act as chief executive officers of the institutions that they lead and serve. On a day-to-day basis, they often make decisions that affect every aspect of their organizations.

It is also important to keep in mind that presidents do not set their own compensation. Instead, their compensation packages are decided by the board of trustees, which is the highest legal authority in the institution. Such boards currently comprise many members from the corporate world, and they have brought certain business concepts with them, including performance bonuses.

College presidents are not overpaid in relationship to their responsibilities and the compensation market place.

Many boards of trustees in today’s competitive world hire compensation consultants to research what presidents at other similar institutions are getting paid. The reasons for this are multiple and include the board’s primary responsibility of attracting and retaining the best talent for their college or university. Responsible boards of trustees are not interested in underpaying their leaders because they are aware that a high performing but underpaid president could be recruited away by a competing organization.

While a board of trustees ought to be sensitive to the compensation levels of other professionals within their university, the most important data that they need relates to the compensation packages of the presidents of comparable colleges and universities because that data describes the “market place” for institutions of their size and mission.

Of course, salary and benefits are by no means the only factors that can attract and retain top performing presidents, because these individuals are also driven by the desire to enhance the mission of their school. Thus, beginning with the recruiting process, it is the responsibility of the board of trustees to make sure that the person they select is “mission-driven.” It is also interesting that presidents of public universities and private nonprofits are compensated at levels significantly lower than C.E.O.’s of private for-profit universities.

Considering the stresses that are placed upon college presidents, and the wide range of responsibilities they have along with the compensation paid to the leaders of similar for-profit entities, I would conclude that university presidents today are not overpaid. Moreover, I have never found a board interested in wasting the assets of its institution by overpaying its president.

 

Salary Gaps Affect Even Those on Top

Dorothy A. Brown is a professor of law at Emory University and a former member of the executive committee of the Association of American Law Schools.

JUNE 23, 2014

University presidents in the 21st century have really challenging jobs. At a time when state legislators are cutting back on higher education investment, but employers are demanding more from our graduates, university presidents must be cheerleaders in chief. Given these facts, perhaps the stronger argument is that they are underpaid. But if you want to talk about overpaid university employees, the group that immediately comes to mind are football and basketball coaches. But I digress.

The current higher education climate demands a different type of university leader – one that is not so tied to precedent and is willing to take risks. But as the higher education landscape has dramatically shifted, the demographic profile of a college president has not. The American Council on Education shows that the profile of the typical college president has not changed over the last 25 years.
different study published earlier this month showed that for the academic year 2012-13, 71 percent of presidents were white and male.

In one study of private universities, white presidents outearn their black peers by about $37,000 on average, and male presidents outearn their female peers by over $100,000.

Regarding wages, at the public institutions studied, there was no gender pay gap, but an unexpected racial wage gap. On average, black presidents at public universities earned $6,000 more than their white peers. By contrast, at private institutions, white presidents outearned their black peers by about $37,000 on average and even worse, male presidents outearned their female peers by over $100,000 on average.

Should the gender wage parity in the public sector surprise us? What about the race and gender wage disparities in the private sector? One potential explanation is that public universities are subject to state disclosure laws and private universities are not. Supreme Court Justice Louis D. Brandeis once said that “sunlight is said to be the best of disinfectants.” Perhaps never is this adage more appropriate than in pay discussions at private universities.

 

A Lesson in Disparity

Cary Nelson is a professor of English at the University of Illinois at Urbana-Champaign, and co-author of “Recommended Principles to Guide Academy-Industry Relationships.”

JUNE 23, 2014

Learning takes place everywhere on a college campus. And sometimes, when what is taught outside the classroom undermines and contradicts what you learn in class, classroom instruction becomes meaningless.

Students, for example, may learn the value of fair employment practices in history and literature classes. They may learn the risks to political stability that the exploitation of workers brings. But the values communicated in these lessons do not have much staying power if the college’s own practices dishonor them.

If students learn that adjunct faculty are earning less than the minimum wage while the university president earns a million dollars, that practical lesson may trump the other values the institution promotes.

When a college or university president has an annual salary 50 times what some faculty and staff earn, the institution delivers a powerful message about its values. It creates an educational laboratory that resonates with contempt for the notion that the campus is a community and a workplace in which fairness and concern for all rules. And it tells students they can set aside classroom learning and classroom values when they leave college and go to work elsewhere. If what is supposed to be an institution embodying higher values imitates the income disparities in a corporation devoted to maximizing profit at the expense of its workforce, why shouldn’t every employer do the same?

And if students learn that adjunct faculty are earning less than the minimum wage and cannot live on their income, while the university president earns a million dollars a year or more, that practical lesson may trump the other values the institution promotes. A university president is a leader whose salary has considerable symbolic value. It sends a message about the character of the institution and what it stands for. Too many presidential salaries are now sending the wrong message to our students and their families.

 

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About bambooinnovator
KB Kee is the Managing Editor of the Moat Report Asia (www.moatreport.com), a research service focused exclusively on highlighting undervalued wide-moat businesses in Asia; subscribers from North America, Europe, the Oceania and Asia include professional value investors with over $20 billion in asset under management in equities, some of the world’s biggest secretive global hedge fund giants, and savvy private individual investors who are lifelong learners in the art of value investing. KB has been rooted in the principles of value investing for over a decade as an analyst in Asian capital markets. He was head of research and fund manager at a Singapore-based value investment firm. As a member of the investment committee, he helped the firm’s Asia-focused equity funds significantly outperform the benchmark index. He was previously the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. KB has trained CEOs, entrepreneurs, CFOs, management executives in business strategy, value investing, macroeconomic and industry trends, and detecting accounting frauds in Singapore, HK and China. KB was a faculty (accounting) at SMU teaching accounting courses. KB is currently the Chief Investment Officer at an ASX-listed investment holdings company since September 2015, helping to manage the listed Asian equities investments in the Hidden Champions Fund. Disclaimer: This article is for discussion purposes only and does not constitute an offer, recommendation or solicitation to buy or sell any investments, securities, futures or options. All articles in the website reflect the personal opinions of the writer.

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