Leftist commentators constantly harp on the compensation of business CEOs, often employing extremely misleading data. but for some reason, the compensation paid to people they’re predisposed to like is never a problem. I’m thinking of entertainers, union bosses, heads of big philanthropies and college presidents. This week’s Pope Center Clarion Call is about the last in that list — college and university presidents.
In the piece, Ohio University economics professor Richard Vedder asks why they are often paid such lofty salaries and bonuses when there is little or no evidence that the students are learning much. He also points out that compensation for top university presidents has been rapidly increasing over the last couple of decades. Does that reflect improved performance, or merely that as more money has poured into higher ed, the leaders were perfectly positioned to make sure that a lot of it went into their pockets?
Part of the explanation is that presidents are often able to stack the board with their allies. Another is that search firms have an incentive to recommend new presidents who will come at a steep price, since the firm is paid a percentage of the salary.
Vedder likes what Mitch Daniels has done at Purdue. Daniels asked the board for a contract that actually lowered his base compensation compared with his predecessor, but which also contained bonus opportunities geared to performance measures. Such a contract makes good sense. Probably very few college presidents would want a contract like that — the job is so much more pleasant if you don’t have to worry about details such as student learning — so it will be necessary for trustees to push for contracts like the one Mitch Daniels has.