November 24, 2003

University Presidents' Salaries on the Rise

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Recent increases in college presidents’ salaries have risen, for some, into the $800,000 range, leaving many people to question, “How much is too much?”

With tuition costs rising and public universities suffering from insufficient state funding, exceptionally high salaries seem inconsistent with university concerns for affordable education.

A recent report released by the Chronicle of Higher Education revealed the salaries of college presidents over the 2001-2002 fiscal year. Among the top paid college presidents were Shirley Ann Jackson, of Rensselaer Polytechnic Institute, earning $891,400 in university compensation, not including other benefits or compensation from corporate sources, Gordon Gee of Vanderbilt University, at $852,023 and Judith Rodin of the University of Pennsylvania, at $845,474. The highest-paid president in the public sector was Mary Sue Coleman, of the University of Michigan, who earned $677,500 that year.

Former Cornell president Hunter R. Rawlings III made $539,854 in university compensation during the 2001-2002 year, not including other benefits. Since the study was conducted using figures determined prior to the appointment of President Jeffrey S. Lehman ’77, his salary is not public record at present.

Compensation and special offers do not appear so different from the corporate compensation currently prevalent in the business world. According to Ronald Ehrenberg, the Irving M. Ives Professor of Industrial and Labor Relations and Economics and the director of the Cornell Higher Education Research Institute, the role of a university president, in some ways, is similar to that of a company’s chief executive officer. He referred to the job as president of Cornell as a “CEO of an organization that has a budget of over $2 billion a year and [approximately] 9,000 employees.”

He explained the importance of a college president’s work, including leading fund-raising and generating revenue for the university. “These are really big jobs,” he said.

Ehrenberg does not believe that rising salaries have a significant effect on tuition. “If there are roughly 13,500 undergraduate students and if all of the president’s salaries and benefits were paid for by undergraduate tuition, than each $100,000 of the president’s compensation would cost the typical undergraduate … $7.50,” Ehrenberg said. “It really doesn’t affect undergraduate tuition at all.”

“Even though these salaries don’t have a large effect on tuition, … it isn’t socially appropriate to be boasting these salaries,” Ehrenberg said.

For many students though, such high salaries seem unreasonable, no matter how demanding the job of a university president might be. “I think that with tuition prices on the rise, it is wasteful to pay university presidents such large salaries when the money can be spent on more productive projects that affect more people,” said Brian Ascher ’04.

The process of deciding the salary is based on many factors that are considered by the Compensation Committee of the Board of Trustees, according to Mary Opperman, vice president of human resources. After the committee recommends a salary, the executive committee, a smaller faction of the Compensation Committee, reviews the recommendation. The process typically lasts from March until May. “It’s a pretty complicated and big decision,” Opperman said.

Ehrenberg believes the recent dramatic increases in salary are due to what he called “a bidding effort for presidents.” He referred to an incident at the University of Michigan a few years ago when the university offered their current president at the time, Lee C. Bollinger, a large package to convince him to remain at Michigan. Bollinger left for Columbia University, where he has been president since June 2002. When hiring a new president, Michigan could not offer less than they had already offered to Bollinger, so Coleman was offered a comparable amount. “That sort of set off a spiral,” Ehrenberg said.

Such events have set an unusual standard for presidential salaries that affect universities across the country. The more noticeable change is the rise in public university presidents’ salaries, as salaries of presidents at private institutions have always been higher than public ones.

Archived article by Stephanie Baritz