Along with the Canada geese returning home and the melting snow revealing buds of green growth, another sign of spring in Ontario is the unveiling of the sunshine list – those individuals in the Ontario public sector and broader public sector earning $100,000 or more. Included as always on the 2012 list are university salaries (for 2011) and given the occupy movement and the preoccupation with the top one percent a glance at university CEO salaries can be entertaining.
Being a university president is a pretty complex job. It is part diplomat, part fundraiser, part cheerleader, part civil service administrator, part strategic visionary, part financial planner and part fire fighter given the tendency for assorted crises to flare up. The main tasks are really forging community relationships (both internal and external to the university), fundraising for the university as its front man, and general strategic vision and direction. Day to day management of academic and financial affairs as well as dealing with the staff and faculty is usually the preserve of a vice-president particularly at the larger places. The buck does eventually stop at the president as she or he is ultimately accountable to the board.
There are undoubtedly many factors that go into determining compensation for such a role including level of prior administrative experience, educational and academic achievement as well as the complexity of the institution being managed. These are difficult to quantify in a quick analysis such as this but as a proxy for scale of the job, why not look at total enrollment and the general type of university (which according to Maclean’s magazine is medical doctoral, comprehensive and primarily undergraduate).
Figure 2 ranks these universities by total enrollment (full and part-time undergraduates and graduates as reported by AUCC) and ranges from a low of 1,250 students for Algoma to a high of 80,000 for University of Toronto. A quick plot of total compensation versus total enrollment (Figure 3) finds a positive linear relationship but only about one third of the variation in salaries is explained by scale of the institution as measured by total enrollment.
Figure 4 plots average total compensation by university type and the highest average salary is for those presidents at comprehensive universities, followed by those at medical-doctoral institutions and finally those at primarily undergraduate institutions. Is a comprehensive institution harder to run than a medical-doctoral? Or could it be that medical-doctoral schools have medical schools that run themselves with even higher paid CEOs-thus reducing the role of a university president.
A quick linear regression (See Figure 5) of total compensation (total) on total enrollment and whether as medical doctoral or comprehensive institution with primarily undergraduate institutions as the omitted category explains just over half of the variation in total compensation. While all the variables were positive determinants of total compensation, only being a comprehensive institution was statistically significant.
What determines a university president’s salary? Size and complexity of an institution – the scale of the job – may explain about half of the compensation package. The other half – the residual – can be a function of individual characteristics and experience, personal traits, and perhaps the hiring committee's view of institution specific requirements for the position at a point in time. In the end, I would venture that much of the total compensation is driven by the unique social culture and expectations of university presidents and what they are able to negotiate with their respective boards given the perceived needs and requirements of boards at the time of hiring.
March 25th UPDATE
Well, I obtained the MacClean's rankings for each university within their category with the exception of OCAD and Algoma (therefore n=18) and also ran a quantile regression (0.5 quantile). I also weighted the observations by total enrollment (aweight). The results are below. They suggest total enrollment and being comprehensive are significant positive compensation drivers. A low Maclean's ranking (larger numbers are lower ranks) is associated with lower total compensation but it is not significant. About 60 percent of total compensation is explained by this regression with 40 percent still in the residual.