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Posted at 9:32 AM ET, 11/ 2/2009

How much is a university president worth?

By Valerie Strauss

I suppose we are supposed to recoil in horror that some presidents of private universities in the United States are earning a lot of money--a record 23 presidents received more than $1 million in total compensation in 2007-08, according to a new survey by The Chronicle of Higher Education.

And some ex-presidents earned even more; former George Washington University president Stephen Joel Trachtenberg (who is a guest blogger of The Answer Sheet), earned $3.7 million in pay and benefits. But don't forget that that sum includes years of deferred compensation. It's not an annual salary, which alone would not have had him in the top.

(The figures represent salaries before the economy precipitously declined, and today, some presidents are returning some of their earnings or freezing their own salaries.)

These are, after all, non-profit organizations that are not inexpensive to attend. A story in today’s Post by my colleague Daniel DeVise reports that 58 private colleges this year are charging more than $50,000 a year in tuition, room, board and fees, compared with five last year.

It certainly can be argued that no non-profit organization should be paying their presidents so much. But as that thought runs through my head, this one does too:

The federal government allows non-profits to give big compensation to their leaders.
True, the Internal Revenue Service has been looking for some time at the finances of non-profit institutions, and some U.S. legislators, especially Sen. Charles Grassley (R-IA), have criticized the spending of some of these organizations.

But the rules still allow trustees to set presidential compensation. And with so many bloated salaries in the American economy for things I consider less important than education, I just can’t bring myself to feel awful about big salaries for presidents of schools who are doing a highly credible job in improving their institution.

Let’s be clear: Presidential salaries are not responsible for high tuitions.

Colleges and universities are enormously complicated enterprises that require 24/7 leadership. As American business folks always say: If you want to attract the best, you have to pay the best.

Sports teams that pay hundreds of millions of dollars for someone to throw a ball in a basket know that. Financial institutions that pay hundreds of millions of dollars for someone to concoct money-making schemes that, on occasion, threaten to bring down the entire American economy, know that too.

And yes, I am aware that the schools in question are non-profit and sports/banks,etc. are for-profit. But what does this say to you about what Americans are willing to pay for and what they aren’t?

Individual boards of trustees have to make the calculation that the leaders they select are worth the money. When they aren’t, they should be forced out, as was the case several years ago at American University when president Benjamin Ladner was found to be racking up big expenses.

His successor, Cornelius M. Kerwin, received $1.4 million in 2007-08, fifth among all current presidents in the Chronicle’s survey of current presidents. But again, some of that was deferred compensation, and the trustees clearly feel he must have done a good job in putting the university back on track after an extremely turbulent and embarrassing period.

So how much is a university president worth?

Back in 2003-04, the trustees of Lynn University in Boca Raton, Fla., decided to reward the school’s president, Donald E. Ross, with a package worth a little more than $5 million. Why? Because he had turned a nearly bankrupt two-year Catholic school for women into a four-year liberal arts college that was doing exceptionally well.

How should the calculation for that kind of contribution be made?

Trachtenberg stepped down as GWU president in 2007 after serving for 19 years, during which he led the university into national prominence and built its reputation as a university for future leaders
.
So, you all tell me, what is a university president worth? Would you cap their salaries?

And here you can take a Post poll on the subject.

By Valerie Strauss  | November 2, 2009; 9:32 AM ET
Categories:  Higher Education  | Tags:  higher education, presidential compensation  
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Comments

I think the data needs to be evaluated very carefully on this. Some of the salary data comes from deferred compensation which must be cashed out when an individual changes positions (provost to president).

Posted by: craiggruber2002 | November 2, 2009 1:45 PM | Report abuse

You wrote:

"...Let’s be clear: Presidential salaries are not responsible for high tuitions..."

So, where are predidential salaries coming from?

I think we should have a PAY CZAR for the educational industry.

Posted by: cs2007 | November 2, 2009 3:31 PM | Report abuse

I attended GW for my undergraduate education. I think President Trachtenberg did a very fine job and most likely deserved that money. Ignoring the day-to-day work that presidents do (which is tremendous), presidents are the fundraiser-in-chief of a University. A gregarious individual like President Trachtenberg may be responsible for hundreds of millions of dollars of contributions alone. Is that alone not worth a sizable salary?

I now attend NYU for law school. NYU has a student body of about 50,000. There are probably 10,000 staff members (if I had to guess). I know firsthand that President John Sexton works probably 12-15 hours a day, whether doing his administrative tasks, going to conferences, fundraising, or teaching courses both in New York and at our Abu Dhabi campus.

So while this doesn't directly answer your question as to what presidents should make, this is my roundabout way of saying that 'they deserve what they currently make.' (at least some of them. I can't speak with experience about every president on the list). As far as capping salaries go, I really don't think that's necessary. One would assume the Boards of Trustees, who from my experiences genuinely care about the institutions they serve, would use their best judgment when determining thee things, and that's all you can ask for.

Posted by: RMS11 | November 8, 2009 12:41 AM | Report abuse

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