High Pay for Presidents Not Shown to Yield Fund-Raising Benefits

The following are excerpts from an article in the Chronicle of Higher Education, published online two days ago:

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.” . . . .

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 . . .


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