It's a pretty good time to be president of a private college, at least financially. The Chronicle of Higher Education just released its annual roundup of executive compensation for private college presidents, and it reports that Shirley Ann Jackson of Rensselaer Polytechnic Institute earned $7.1 million in 2012 alone. (2012 is the latest year federal tax documents with this information are currently available.)
John L. Lahey and Lee C. Bollinger of Quinnipiac and Columbia universities, respectively, came in second and third. Both made more than $3 million apiece in 2012.
The Chronicle's Sandhya Kambhampati reports Jackson, Lahey and Bollinger aren't alone in the college president millionaire club:
"Three dozen private-college presidents earned more than $1-million in 2012, with the typical leader making close to $400,000, a Chronicle analysis has found.
"The millionaire club increased by one from the year before, and the median pay rose by 2.5 percent."
And Jackson's $7.1 million compensation is a lot higher than the highest pay in 2011, when Robert. J. Zimmer of the University of Chicago made almost $3.4 million.
Jack Stripling, who covers college presidents for the Chronicle, says there's a simple reason for the big difference.
The bulk of Jackson's 2012 compensation "is a payout of a retention — basically a deferred compensation package that was accumulated over 10 years, and then paid out in 2012," Stripling told NPR. "These types of arrangements are really common in higher education when a board wants to make sure a president doesn't leave for another job. They will often say, 'Hey, if you stay X amount of time, then you will get this payout at the end of that specified period,' and for Shirley Ann Jackson, that was a 10-year payout."
The New York Times reports that Rensselaer is standing by Jackson's compensation package, and even pledging to continue it. Arthur Gajarsa, chairman of the school's board of trustees, told the Times:
"The deferred compensation was provided so that we would be able to keep the president involved ... It vested only after 10 years, so if she'd left, she would have lost it. She's worth what we paid, because she has done the job magnificently, and taken the university to a different level."
The Times adds:
"Indeed, he said, the board has awarded her a second 10-year deferred compensation package, of about the same size, to retain her for the next decade."
Stripling says moves like Jackson's retention incentive, taken right out of the private-sector playbook, have long been common in the university world. "The people who run the boards that oversee these various institutions often come from corporate America," Stripling told NPR. "So they're doing things that are not uncommon in their own experience."
But Stripling pointed out that these colleges and universities have one big difference with the private sector. "They ... have preferred status within the federal tax code," Stripling said. "And I think that legitimate questions can be raised about at what point does compensation press the bounds of appropriateness, given the types of institutions they lead, and the exemptions they're afforded under the federal tax code?"
The Chronicle's data also breaks down private-college-president compensation as a part of a school's entire budget. By that measure, Harvard University President Drew Gilpin Faust was the lowest-paid president relative to budget in 2012. John E. Klein of Randolph College in Virginia was the highest-paid president relative to budget. The Chronicle says his 2012 pay was a little more than 2.9 percent of his school's budget.
Stripling says even though college presidents' salaries seem high, many think they're worth it. "There's this perception out there that there are only a handful of people that are qualified to run these large, complex organizations," said Stripling. "Some of these really big-time schools like Princeton or [The University of] Chicago, they can make a legitimate argument that they're overseeing something akin to a small city."
And Stripling says leadership at these schools usually support the high pay. "I'll tell you what we hear from college boards when we ask them this question," Stripling said. "They will say that the return that they get on the investment in this individual is tenfold, 50-fold what the individual makes, because of all of they do, in terms of fundraising and other things that are viewed as transformative."
As far as public colleges and universities, presidential compensation is high there as well. The Chronicle reported on those numbers earlier this year. E. Gordon Gee made more than $6 million for the 2013 fiscal year. That number includes a compensation package from Ohio State University, which he left that year.
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