Colleges Now Tying President Pay To Graduation, Hiring Rates

Career College Central summary:

  • The idea of tying executive compensation to specific performance goals has been drifting slowly into higher education from the corporate world. Universities and colleges are increasingly under the same kinds of pressure from parents and politicians that CEOs are from shareholders.
  • About a third of presidents of private colleges and universities are now eligible for so-called variable pay, or pay for performance, according to Yaffe & Co., an executive compensation consulting firm. Of those presidents, 64% received their maximum possible incentive bonuses last year, the agency said, which came to a median of $34,000 each. Public universities are jumping on the presidential performance compensation train, too.
  • This month, for the first time, the heads of the nine universities of the University of Texas System were given bonuses of up to 10% of their salaries based on their cost savings, growth in research grants, fund raising, graduation rates, and other measures. And former Indiana Governor Mitch Daniels, who took over in January as president of Purdue University, is paid $420,000 a year with the potential to earn an additional $126,000 tied to such things as lowering students' debt.
  • Not all of these arrangements have been met with praise. Some critics complain that presidents should not be paid extra for doing things that seem to fall under their job descriptions — especially with money tight.

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