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    Should College Presidents Earn Millions?

    challenge posed by Randy Myers 1214 days 11 hours 49 minutes ago

    Category: Education
    Challenge Forum

    Should College Presidents Earn Millions?

    They don’t build many like Gregory Fenves.

    The former executive vice president and provost of the University of Texas at Austin who was offered $1 million a year last month to become president of the school—a nice bump from the $425,000 he had been earning.

    But Fenves did something rare and selfless. He negotiated his pay down to what he considered a more reasonable level: $750,000. With the university wrestling with administrative costs and tuition affordability, he said, a million-dollar salary would have made it hard for him to work with the Texas legislature.

    Nice sentiment. Still, it's not the American way. When it comes to pay, we take what we can get—and convince ourselves we deserve it. Certainly we’ve certainly heard no complaints from the presidents of Rensselaer Polytechnic Institute, Quinnipiac University or Columbia University, who, according to the Chronicle of Higher Education, received compensation totaling more than $7 million, about $3.75 million and almost $3.4 million, respectively, in 2012—the most recent year for which data are available.

    Do college chiefs deserve this much? Sure, they rung big, important institutions and work long hours. Their corporate counterparts are paid well, too; many CEOs earn more than a million bucks a year, and their employers say it’s necessary to get top talent.

    But consider this. A fair amount of research has shown a distinct lack of correlation between what a company pays its CEO and how its stock performs—a benchmark by which many CEOs are judged. A 2009 paper by researchers at the University of Utah and Purdue University said firms with CEO pay in the top 10% experience “negative abnormal” stock market returns of about 13% over the next five years.

    So, maybe those CEOs are being overpaid. What about college presidents? Do schools need to shell out big bucks for “top talent,” or are golden pay packages out of touch at a time when 70% of college graduates leave school with an average $33,000 in debt?

    Suggested reading:

    “Platinum Pay in Ivory Towers”

    “Is Your CEO-employee worth it?”

    “Performance for Pay?

    Re: Should College Presidents Earn Millions?

    I disagree on the whole with that amount of money being paid to University Staff in general. Perhaps a professor who is highly published or has done ground breaking research, but for a administrative position? I just think it is unnecessary. Not nearly as bad as college coaches, however. That is what I have a real problem with.
    I just feel like administration is certainly tedious work and there are certainly politics to be navigated. But I am a big fan of paying for performance. Are you saving the school money? Are you saving the STUDENTS money? Keeping tuition down and standards up?

    My school is currently competing for funds in the "Race to the Top" initiative and I think the "race to the money" is costing the students in the quality of our education.
    For example, we recently went from a 4 credit system to a three credit system. Supposedly to "speed graduation" rates. Well tuition went up as well. So now, Instead of taking 3, 4-credit classes for a full time load of 12 credits, I take 4, 3-credit classes. To "help" us graduate faster, they have made a "credit band" where if you take 12-16 credits it is the same price. No additional charge. So, obviously, everyone wants to save money, so we all add on that 5th class, making our credit total 15. And it is just too much. No work was removed from the courses when they went from 4 to 3 credits. No homework or tests removed. Just the credit. So it has really made us, as students, overwhelm ourselves with work in the hopes of saving money. I attend on of the cheapest schools in my state and a single credit is still almost $500 (State school, not private) after fees, etc. So the cost of education is just getting out of hand. My community college where I did my first two years cost about $112 per credit and I feel like I received just as good of an education If a community college can run on such a small budget, is it unreasonable to think they could also make a 4 year education cheaper?
    So the craziness of paying millions of dollars to administrators and sports coaches is just absurd to me. American youth are putting themselves in debt that it will take over a decade or more to get out of just to get an education. We need less spent on administration not more.

    Re: Should College Presidents Earn Millions?

    This is an interesting topic, the excessive pay for these "top talent" CEOs doesn't seem to add up. How do we justify millions of dollars? What is their work worth? What are they really doing to earn that amount of salary? It seems extremely excessive. I am a recent grad student from a top college. My classes cost $2900 per credit. Out of every class, I rarely interacted with the professor. Sometimes the dates of the class modules were from the year prior. They haven't even updated the syllabus! So to pay someone that much money for curriculum that has been repeated for years is ridiculous. I don't see the justification for the amount of money I have spent to earn my degree. I value education and I am proud of my studies, but the amount of debt I am now racked with is depressing. It is really hard to be proud of my accomplishments when I know I owe a lot of money. It seems almost wrong. It is very discouraging.

    One of my professors asked me to apply for their PhD program. I remembered being flattered, but I also felt like college is a business, of course they want me to continue my education, they are making a lot of money off of me!
    So as you can conclude, I think college presidents making millions is ridiculous and has no merit.
    Education needs to be affordable and college presidents should be made appropriately, not exorbitant salaries.

    Re: Should College Presidents Earn Millions?

    Yes they should earn millions because the coaches of the athletic teams and researchers earn millions. President Simon at Michigan State University donates some of her salary back to the university. It depends on the school and the reviews of the students.

    Re: Should College Presidents Earn Millions?

    Mr. Myers,

    I think there are two questions asked. The first is "Is it just?" and the second "Is it practical?" The answer to the first question is "clearly not." But the world, or at least the U.S. runs on practicality. Therefore, the answer to the second question is more important and the answer happens to be "yes."

    We have all seen the graphics on CEO pay as a function of worker pay. In 1950, it is sensible, by 2015 it is an obscenity. So it goes; there is little that any of us can do on that account. Practically speaking, colleges, like any other businesses, will compete for leaders. If other colleges are willing and able to pay over a million per year for a president, a coach, or the guy who drives the campus bus, then that's what your college is going to pay.

    But here is the quid pro quo: If a college wants to run itself like a business, then it can pay taxes like a business. And if it wants tax breaks, it needs to accept the limitations that come with those breaks. What is clearly both unjust and impractical is when these leaders earn obscene salaries from universities that are run for profit (even when they disingenuosly tell us they are not) and then the for-profit university gets a tax break. That's the part that can and should stop immediately.

    Re: Should College Presidents Earn Millions?

    I find it excessive to pay those amounts.

    I have never understood how top people in companies get paid so much, yet do the least amount of work, while the ones actually making the company successful is the workers.

    I feel the same about college presidents and the various staff. It is good money thrown to bad that could be used more wisely, in my opinion. It could lower the tuition costs and various other expenditures.

    Doesn't the presidents of most universities get perks like a home to live in on campus or near by and usually a car to drive, etc. Is that not good enough? I think being able to say you are the president should be good enough with a minimal salary....again my opinion.

    Interesting topic, Randy! Thanks!

    Heather

    Re: Should College Presidents Earn Millions?

    CEO's are not being underpaid, it is the average employees that are not being paid enough.

    Throughout the world and even in homes there is a chain of command. This chain provides everyone with a duty and an individual (group) to report to. In the school system (as I know it to be) the chain goes student, teacher assistant, teacher, department head, guidance counselor, Assistant Principal, Vice Principal and Principal. Businesses have their own respective chains, that vary with each establishment. The pay for each position, fall accordingly, the person managing the entire company is expected to make more than the person watching just a small section. The problem with this is when the gap between the pay scales become more and more distant.

    It is not unheard of for a CEO of a fortune 500 company to make over a million dollars annual salary. Just as it is not unheard of for a crew member to make an hourly minimum wage. They are getting paid to do their jobs. The problem come in when the company is doing well so they decide to up the pay of the CEO and those around him and neglect those who are actually in the shops and markets making the goods that go out to the consumer. Politics play a role as well, why raise the pay for an hourly position that is held in a right to work state? In Florida as well as Georgia, a person can get fired for little to no reason, for that- why should the pay for that position be raised if the position itself is left riding on wither or not the manger is in a good mood that day?

    In the case where a company is failing and the CEO is making more than the business is bringing in, why is that person still holding that position? Office Politics, there could be a contract stating no matter what happens that person will still get paid X amount.

    CEO's in general are not getting paid too much money, the work that they do allows for those under them to have their position. A good business needs a leader or governing body to make decisions for the whole to keep them in tack and everything running, order. The issue is when the pay gap is not reasonably divided among the whole, is when the question of "too much pay?" is raised. In america politicians get to vote on a raise in their salary. At a local business not so much.

    CEO's arent making too much those under them are making too little.

    Re: Should College Presidents Earn Millions?

    In my above post my opening statement is incorrect, I meant to say
    "CEO's are not being OVERPAID,..."

    Re: Should College Presidents Earn Millions?

    What a great topic, and interesting facts about the correlation of high paid CEOs and their stock returns.

    In my opinion there are many jobs, including that of college presidents, that are completely over paid. And as this college president alluded, the more he is paid the more of the students money is going into his pocket.. While the president of the college does have a lot of responsibility, I think his priority should be creating a place where the students are able to reach their full learning potential. As the president of the school, he is not directly responsible for the students academic success, but rather the students and their teachers are. So it should make sense the the students and teachers require more funds in their pockets in order to access better learning tools, or to decrease financial stress which can often hinder learning.

    On another note, why would a college president and anyone for that matter require such a large salary? If they are working full time hours and take a 3-4 weeks vacation a year, and manage their money well, why the hell does someone need to make a million a year? I realize the cost of living varies from city to city but honestly... I have a family of seven. Between my husband and I we gross maybe $70k annually. Now granted we live in a small home, drive a beat up old suburban and never take big vacations, but we live free of any state assistance and survive well. I cannot image "needing" or insisting on a large income. I don't believe it is necessary.

    I say kudos to this president who acknowledged that enough is enough. He understands that the amount of his salary does effect those that he is in the position to oversee. I think this is very admirable and the world would be a far better place if more people would follow his lead.

    Re: Should College Presidents Earn Millions?

    I honestly do not believe that they should earn millions. Reason being because their are many students that go to college and are struggling financially, and are working hard to be in that school. Also the president of the U.S. Does not even make that much Obama makes about $400,000 per year, I think that college presidents should make about maybe $350,000 per year and if they do make more than they should give back to the school and make scholarships for people who need the money. Because going to school after grade school is expensive, books are not diamonds and are more expensive than a basic computer.

    Re: Should College Presidents Earn Millions?

    As someone in school to be an educator I believe that the people in schools are the ones that should be making millions. There is no way to become anything degree holding with out a series of poorly paid teachers helping you along the way. That being said I am also all about lowering the cost of higher education. So these companies requireing a higher level of education should subsidize the schools inorder to prevent the cost rise to the student allowing the education to still be affordable. Students should not be graduating with tens of thousands in student loan debt. Okay sorry tangent for a minute. Yes all educators that have proven them selfs deserve higher pay. The president of a school is no diffferent than the CEO of GOOGLE. They are just over seeing the production of a different product.

    Re: Should College Presidents Earn Millions?

    Obama may only make 400000 on paper but he pays for absolutely nothing while in office and will collect that salary for the rest of his life. So lets just say he lives 35 years after he gets out of office and he serves the full 8 years for a total of 43 years worth of pay if he were only paid for the time he served it averages out to be 2150000 a year for the years he was in office. Keep in mind that he has a spending budget for personal use so he shouldnt have to touch his salary. I do agree with "Bat Man rules" school is way to expensive thats why i believe that companies that want a higher degree should be supporting the schools to provide it.