Determinants of change in presidential pay at public colleges and universities

Abstract

The purpose of this study was to examine determinants of change in presidential pay at public universities and colleges. While much attention has been paid to presidential pay in the popular press, formal studies of this phenomenon are much less common, and those that do exist point to opportunities for improved understanding. This study addressed gaps in the literature on presidential pay by examining presidential pay change rather than pay levels, focusing exclusively on public institutions across three major institution types, and drawing on data as recent as the 2010-2011 academic year. Prevailing theories of executive compensation framed the development of seven hypotheses that were tested through regression analysis. Change in presidential pay over a five-year study period was hypothesized to be a function of change in institutional complexity, academic quality, fiscal integrity, and dependence on state funding. This study found that change in presidential pay was most strongly associated with institutional complexity. Change in measures of fiscal integrity and change in measures of academic quality had essentially no effect on change in presidential pay, suggesting that the relationship between pay and performance is tenuous at best among presidents at public colleges and universities. Additionally, this study provided little evidence to support the presence of principal-agent dynamics in higher education organizations, as board composition had no effect on the relationship between pay and performance. Finally, this study found that presidential pay was unrelated to institutional dependence on state funding. This finding suggests that pay for presidents in public universities and colleges may be less responsive to demands for increased accountability and efficiency as originally proposed for this study.