Compensation of Presidents, Provosts, and Professors at US Public Universities

While very generous compensation packages in the corporate world have become the norm, there is growing criticism of large compensation plans for administrators at universities. We examine compensation of presidents based upon individual characteristics and institutional features of US public universities. Unlike previous research, we also consider the potential influence of the nature of the governing board. Using the method of Seemingly Unrelated Regressions, we use the same framework to estimate president, provost, and average professor salaries. This enables us to directly compare the factors driving compensation for each. Many of the institutional and individual characteristics impact the pay of university administrators and faculty similarly. We find associations and interactions matter in compensation of administrators. Presidents and provosts who have a prior connection with the university (internal hires and alums) are paid less than their counterparts. Provosts with a longer overlap of tenure with the president benefit from higher salaries than their peers. Presidents and provosts serving at universities with an autonomous rather than systemwide board enjoy higher compensation, but there is no benefit to faculty. While greater revenues and enrollment leads to more pay for everyone, faculty rewards of higher enrollment are smaller in magnitude. Personnel expenditures account for the largest percentage of a university’s budget. A better understanding of the factors that affect compensation, particularly administrator pay, may become increasingly important as public criticism of university spending and the cost of higher education intensifies.