Statement by NAICU President David L. Warren on Executive Compensation at Private Nonprofit Colleges and Universities

December 05, 2011

(Note: The Chronicle of Higher Education today released its annual report on executive compensation at private, nonprofit colleges and universities. According to the study, median compensation (salary and benefits) was $385,909 for 2009, a 2.2 percent increase over 2008. Of the nation's 1,600 private, nonprofit colleges, 36 provided compensation of more than $1 million.)

The salaries of executives at private, nonprofit colleges and universities reflect supply and demand. Searches for these positions at a significant number of independent institutions are highly competitive, and colleges must offer compensation packages that attract qualified leaders. Salaries are largely set through marketplace studies.

Trustees, as fiduciaries of their institutions, generally exercise careful judgment in setting compensation levels and fringe benefits in consideration of the job market in higher education and beyond, and in light of generally accepted standards of propriety. A board's decisions will vary by institution, depending on such factors as marketplace, budget, and the specific challenges faced by the institution. 

The job of college president has changed dramatically in the last 30 years, as have the demands. There is just a small pool of candidates who possess the skill set that is required, and are willing to take on the stressful 24/7 nature of the position.

Presidents must have fundraising expertise, political savvy, solid management experience, a strong business sense, the ability to develop and deliver an educational vision for the institution, negotiating and mediating skills, and the ability to represent the college effectively to diverse stakeholders. Presidents must be capable of administrating organizations with thousands of employees and budgets reaching hundreds of millions of dollars at many larger institutions.

Private college leaders face increased pressure on many fronts: budgetary challenges brought on by the economic downturn, uncertainty about the long-term sustainability of higher education's traditional financial model, calls for further government regulation, greater competition from public and for-profit institutions, growing student financial need, and consumer concerns about growing sticker prices.

A study by the Council of Independent Colleges (CIC) illustrates the impact of the growing pressures of the job on the size of the pool of qualified candidates. CIC reports that less than one in four chief academic officers at private colleges plan to pursue a presidency.

Presidential salaries make up a very small percentage of overall campus budgets, and have virtually no impact on tuition increases. In fact, inflation-adjusted net tuition at private, nonprofit colleges and universities actually declined by 4.1 percent in the past five years, according to the College Board.



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