Dive Brief:
- Private college presidents' compensation continues to grow, according to new data from The Chronicle of Higher Education on the salaries and benefits of 585 chief executives in the 2017 calendar year.
- The average compensation of the 20 highest-paid presidents climbed to more than $2.5 million, up 15% from 2016, according to Education Dive's analysis of the data. Bryant University President Ronald Machtley's compensation package topped the list at $6.3 million.
- Sixty-four presidents earned more than $1 million in 2017, three more than the prior year. Three presidents made more than $5 million in 2017, drawing attention to the use of deferred compensation to retain leaders, according to the Chronicle.
Dive Insight:
In its analysis of the numbers, the Chronicle highlights the hefty deferred compensation packages that are designed to retain presidents by tying a longer tenure to considerably higher pay.
That was the case for Machtley, who plans to retire in May after 24 years in his position. The $5.4 million the university paid to him beyond his base salary in 2017 was part of a deferred compensation plan that vested that year, according to the Chronicle. Of that sum, $2.5 million was held back to cover taxes, but Machtley received another $242,000 the next year, the Providence Journal reported.
A pair of researchers from George Mason University who study executive compensation told the Journal that Machtley's payout was excessive and raised questions about whether deferred compensation was in the best interest of the institution.
Such deals are not limited to private institutions.
In a study of 115 contracts of public university presidents, about half of them "provided for either some form of deferred compensation or a supplemental retirement benefit," Judith Wilde and James Finkelstein, the George Mason researchers, explained in a 2017 essay. That figure didn't include contracts that cited policy documents calling for the perk.
One-third of the contracts had performance-related incentives while 13% included bonuses for retention or contract completion. Other perks mirror those offered to corporate CEOs, including housing and car benefits and memberships to professional and social clubs, the researchers wrote.
Such perks tend to draw criticism from the public amid broader conversations about the cost and value of a traditional postsecondary education, particularly when they involve public college presidents. But they can be an important tool for institutions as the average tenure for presidential jobs falls and more colleges have leadership positions to fill.
Montana State University recently offered its sitting president a 50% raise and a boost in her deferred compensation to pass on another job offer, Wilde and Finkelstein pointed out in a recent post for Education Dive.
