In the hubbub surrounding President Obama’s decision to cap salaries of commercial-bank CEOs at $500,000 (if they receive future federal funds), the salaries of college and university presidents have been flying under the radar. Some reconsideration is due, particularly because substantial taxpayer dollars go into their services, with more funds coming via the stimulus package. State and federal taxpayers subsidize public universities substantially, but even private schools benefit from things like tax-subsidized student loans and tax-funded faculty research.
If there is good reason to prevent tax dollars from finding their way into supposedly excessive bank CEO salaries, what about the salaries of their college and university counterparts? Not important, you say? Let’s look at some numbers.
Higher education’s bible—The Chronicle of Higher Education—publishes a survey of college and university presidents’ compensation packages each year. The most recent appeared November 21, 2008. Presidents were grouped by types of institution to promote comparability. For our purposes the most important distinction was between presidents at public research universities with at least 10,000 students (like Ohio State University) and presidents at private universities with very high research activity (like University of Chicago). In university lingo, “research” means lots of “government research grants.”
The 184 public research universities had 59 presidents whose 2007-2008 compensation packages were worth more than $500,000. The average for this $500,000-plus club was $654,000.
Of the 32 research-intensive private universities, 31 had 2006-2007 presidential compensation packages worth more than $500,000, the average being $895,000. In case you’re wondering, the “missing” president in this second presidential group was Notre Dame’s Rev. John I. Jenkins. His package was worth $480,000.
These compensation packages include salary, use of car (are you listening, Tom Daschle?), use of house, deferred compensation, retirement, and performance bonuses. Data for the first group refer to the 2007-2008 academic year, while the second group’s packages were for the 2006-2007 academic year. Current year (2008-2009) packages for presidents are undoubtedly larger—the president of our university, for example, received a 9.9 percent salary bump for the current year is still below the $500,000 total-compensation figure.
Higher education has long occupied the role of scold, with its de facto CEOs being the high priests and priestesses of rebuke toward the business sector. Most of the rebuke has been little more than the promotion of class envy and covetousness, shielded by layers of political correctness. Corporate CEO compensation levels have been easy targets for this envy and covetousness.
The priests and priestesses have been ensnared in their own words. Have any offered to drop membership in their $500,000 plus club? A very few. James R. Ramsey, president of the University of Louisville, turned down a $113, 857 bonus that would have brought his compensation above $500,000. Michael J. Hogan of the University of Connecticut, who makes more than $550,000, turned down an additional bonus (expected to have been $100,000) last September. We’re not holding our breath awaiting an upsurge of emulators.
What is good for bankers should apply equally to their university do-alikes. Maxims about “putting your money where your mouth is,” “walking the talk,” “buying what you preach” and “put up or shut up” all apply. The irony in the contradiction is delicious, but taxpayers haven’t yet figured out a way to eat irony.