College Campuses Debate Administrators' Lofty Pay

Financial problems at colleges and universities, and U.S. limits on corporate pay, have students and faculty asking if higher education can afford such high compensation

By Ellen Gibson

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The president of the University of Florida got a nearly $300,000 performance bonus in 2008. So did the head of Florida State University. Meanwhile, Governor Charlie Crist authorized double-digit tuition increases at all public universities in Florida, which has been hit hard by foreclosures and bankruptcies. But largesse for university presidents wasn't confined to the Sunshine State last year.

With the national $787 billion economic stimulus plan set to give higher education new federal assistance, the lofty compensation for some school presidents is drawing critical scrutiny. The Obama Administration's recent crackdown on executive pay at companies that accept bailout funds has resurrected a heated debate about whether college presidents earn too much. While the impact of the Wall Street salary cap is likely to be limited—pay consultants have already identified ways around many of the limits—the action signals a shift in the national attitude toward lavish compensation. Given an economic climate in which tuition is outpacing inflation, endowments are plummeting, and colleges are pleading for more government aid, the public may sour on seven-figure compensation for university presidents.

Hefty Benefits and Perks

University presidents may not be as generously compensated as their counterparts in the for-profit world, but their pay has been rising steeply over the past 15 years, especially compared to professors' incomes. One-third of presidents at public universities now earn more than $500,000 a year. The median pay for public-school presidents in the 2007-08 school year was $427,400, according to an annual compensation survey by the Chronicle of Higher Education. It was $100,000 higher at private colleges.

With base salaries well into the six figures, the administrators' total compensation is rounded out by perks like retirement payouts, retention bonuses, performance awards, expense accounts, and the use of well-appointed homes and cars. For instance, E. Gordon Gee, president of Ohio State University, took home a total of $1,346,225 last year, including a $310,000 performance bonus. Henry S. Bienen, president of Northwestern University, raked in $1,742,560, thanks in part to $590,929 in deferred compensation from the previous ten years. (Bienen, 68, has announced his retirement this year.) These totals do not include money both men earned from serving on corporate boards. Gee is on the boards of Massey Energy (MEE), Gaylord Entertainment (GET), Hasbro (HAS), and Dollar General, while Bienen, a former director of Bear Stearns, serves on the boards of the Council on Foreign Relations and the Steppenwolf Theater.

Faculty Pay Gap Has Been Growing

No one is claiming that college presidents are making anywhere near as much as Wall Street CEOs and other corporate titans. After all, in 2007, the world's 500 top-paid chief executive officers earned an average of $12.8 million apiece.