As Tim pointed out recently, University of North Carolina system chancellor's recently received generous market adjustments from the UNC Board of Governors. I tried to ignore it but the Chronicle posted this article which opened the wound:
Public colleges should not assume that a generous salary will buy them a president who is adept at raising money, a new study concludes.
After accounting for factors like institution size, the researchers, all at Florida State University, found no link between how much public colleges pay their presidents and how much money the institutions take in from private donors and state appropriations.
"As presidential salaries have continued to increase, there is little to no discernible relationship between these increased salaries and revenue generation," says a paper summarizing the study’s findings. It adds that, although many institutional leaders and boards suggest "you get what you pay for" when it comes to presidential compensation, "the argument that high presidential salaries drive private giving and state funding appears dubious."
'The argument that high presidential salaries drive private giving and state funding appears dubious.'The researchers, who were scheduled to present their findings in Denver on Saturday at the annual conference of the Association for the Study of Higher Education, caution that their analysis had some significant limitations. They were unable, for example, to fully account for inconsistencies in how colleges report the presidential-compensation figures that the study derived from an annual presidential-salary survey conducted by The Chronicle.
Nevertheless, James H. Finkelstein, who studies the compensation of college presidents as a professor of public policy at George Mason University, said the study’s findings were consistent with research on executive pay at public corporations, which paints a decidedly mixed picture of whether higher compensation for chief executive officers leads to higher stock prices.
A 2013 study of private-college presidents actually found some evidence of a donor backlash against high executive compensation. That study found that such a president’s appearance on The Chronicle’s annual list of the 10 highest-paid private-college leaders was associated with a substantial one-year drop in contributions to their institution. The study’s authors said the declines in giving appeared associated with increased donor awareness of a president’s high compensation stemming from his or her appearance on The Chronicle’s top-10 list.
via chronicle.com
It seems like an odd thing to do. If the UNC system were a private firm, it would like to keep all salaries low. If a low salary led to recruitment problems then you'd raise the salary the next time you hired someone. You wouldn't encourage the low quality employee to stick around by giving him/her a raise. But, as the article suggests, this is similar to the CEO pay model where the person at the top receives large raises that aren't much tied to performance.
The chancellor raises seem especially odd considering equity. UNC system faculty received no state-funded raises this year (and haven't received much from the state since 2007). There is a one-time $750 bonus for all state employees and various campuses raised tuition to fund faculty raises. Appstate faculty received a 2.2% average raise. But again, this is similar to the CEO model where treating the workers not especially well is rewarded with large raises at the top.
Another weird part is the timing. You would think that the UNC Board of Governors would wait until the new system president was in office in 2016 (the UNC System President search was not without controversy) and then she could dole out the raises as she saw fit and enjoy the resulting employee loyalty.
The only reason I can imagine for the chancellor pay raises is that, maybe (I don't really know if this is the case), in the private sector there is a big concern about equity between the CEO and those who report directly to the CEO. The CEO in this case is the president of the UNC system and the campus chancellors report directly to the system president. The new UNC System President has received a compensation package that is significantly more generous that the previous president received. The Board of Governors may have been concerned that campus chancellors might be upset about the widening pay gap.
And one thing seems clear to me. It is difficult to imagine that anyone who doesn't actually work on campus in the UNC system cares much about UNC system faculty.
