Saturday, June 24, 2006

Academic Executives' Compensation

Iowa's Board of Regents is searching for a new University of Iowa president. Some statements from Regents indicate they believe that multiple-hundred-thousand-dollar salaries are necessary to attract someone capable of the task; that there is a "market" for university presidents not unlike the market for cattle or houses. "'[There are] guidelines as to where the market seems to be,' she [Regent Teresa Wahlert] said. ‘I think the market will pretty much tell us, if you want person "X", this is probably where you’ll have to be with the package.'’’ Diane Heldt, "Regents: UI President Needs Higher Salary," The Gazette, June 23, 2006.

Given the willingness to pay the University of Iowa football coach $3 million a year, $300,000 or more for its president doesn't seem all that much. But is it truly the case that no one can be found who would be willing to take the job for the challenge, opportunity, prestige, responsibility, experience -- and just plain fun -- unless paid well in excess of $300,000 a year -- plus house, car, various expense accounts, deferred compensation and other benefits? (Living expenses in Iowa City are well below those in America's major urban centers, the state's average family income is under $50,000, and the community is often ranked (by a variety of standards) as one of the best places to live in the U.S.)

Are the Regents right?

If this interests you there's an exploration of the issues surrounding compensation in general, and executive compensation in particular, in Nicholas Johnson, "Pricey Presidents' Added Cost," The Daily Iowan, March 7, 2006.

1 comment:

Nick said...

"'You get what you pay for,' said Teresa Wahlert, the regent president pro tem . . .. 'You don't get an extremely qualified academic and entice him to stay' with a lower salary, she said." Dean Treftz, "Board Eyes More $ for Prez," The Daily Iowan, June 22, 2006, p. 1.

Perhaps. But a contrary perspective is offered in Nicholas Johnson, "Pricey Presidents' Added Cost," The Daily Iowan, March 7, 2006, linked from the end of the original post.

That is: Those who are attracted to a position because of the high pay may well be much less enticed to stay. Those who "know the price of everything (including themselves) and the value of nothing (including 'income' measured in a coin other than dollars)," those whose self-esteem, motivation, and very lives, are centered on, and measured only in, dollars, may well be much more rather than less likely to move on when the next, even higher, salary is dangled before them.

Someone who could earn much more, but takes the job anyway, because of the challenge, opportunity for growth, sense of contribution, or affection for the institution, may very well be someone who is more likely to be "enticed to stay."