Academic journal article Academy of Educational Leadership Journal

On the Increasing Salaries Being Paid to University Presidents

Academic journal article Academy of Educational Leadership Journal

On the Increasing Salaries Being Paid to University Presidents

Article excerpt

ABSTRACT

For the past decade or more, the salaries of the Chief Executive Officers of American firms have been a topic of heated debate. This debate in the corporate world of business seems to have more recently spilled over into at least some of the salaries that are being paid to the presidents of various universities. Today, there are scores of university presidents receiving a million or more in yearly compensation. On top of the yearly salary, there are the perks, bonuses, and retirement costs that can add another million or two to the package.

Citing examples from the corporate world as well as higher education, the objectives of the paper are several. First, like in the world of business debate, is the difference in the salary of the person at the top and those further down the hierarchy widening? Second, it is an attempt to determine to what extent the rising salaries of university presidents are problematic. Third, to investigate and propose some ratios that might be appropriate for comparing those differences across campuses and over time. Fourth, the study looks at average faculty salaries and how those compare to average presidential salaries. And, fifth, it is an attempt to provide some insight into the factors that boards of education use in determining presidential pay.

Among the findings and conclusions of the paper are the following. There remains a big gap between what is happening to CEO salaries in the corporate world and those in higher education. On the other hand, there appears to be a slippery slope effect taking place in salary creep for presidential salaries. This slippery slope is creating a ratcheting up effect on various levels just below the president. All contributing to what may be a more pressing issue, requiring a need for further analysis, and that's the growing bureaucratic costs of running a university.

INTRODUCTION

For the past decade or more, the salaries of the Chief Executive Officers of American firms have been a topic of heated debate. Some of the important issues at stake were the amount of pay for these executives, the perks that often accompanied their salaries, stock options that often were much more than just the salary, and the CEO's compensation package as compared to the average, the median, or the lowest paid employees in the company. The essence of this debate revolves around the fairness of their salaries as compared to those throughout the organization and the justification or logic for such high amounts to those at the very top of the hierarchy.

The debate in the corporate world of business seems to have more recently spilled over into at least some of the salaries that are being paid to the presidents of various universities. Today, with scores of university presidents receiving a million or more in yearly compensation, while charging $50,000 plus in yearly tuition, and total student loan debt exceeding $1.1 trillion dollars, perhaps the increasing pay scales for university presidents should be scrutinized more closely.

The objectives of this article are several. First, to determine, like the debate in the corporate world, is the difference in the salary of university presidents and those further down the hierarchy widening? Second, it is an attempt to determine to what extent the rising salaries of university presidents are problematic. Third, to investigate and propose some ratios that might be appropriate for comparing those differences across campuses and over time. Fourth, it is an attempt to provide some insight into the factors that boards of higher education use in determining presidential pay.

EXCESSES OF CEO PAY IN THE CORPORATE WORLD

First, some examples of what many consider to be gross excesses of CEO pay in the for profit corporate world. The median pay for the Chief Executive Officers of 500 companies in the Standards & Poors Index was $11.4 million in 2013; roughly 257 times the income of the American worker. …

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