Presidential Compensation

Posted on September 18, 2017 by Alex Usher
Over the summer, the revelation that the University of Alberta paid Indira Samarasekera two full years of administrative leave at over $550,000 per year after the conclusion her ten-year (two-term) Presidency caused a series of snit-fits, the most notable one being this one from Paige MacPherson, the Alberta Director of the Canadian Taxpayers Federation.

As I’ve noted before (here and here), Canadian university Presidents are not that well paid, at least by the standards of other Anglosphere universities. Paul Kniest, of Australia’s National Tertiary Education Union, helpfully put together a good international comparison which I reproduce below (the blog post from which it is taken is here).

Now those figures are in Australian dollars, but our currencies are close enough to par as to make no odds. Also, yes, the Canadian number looks a little low; I think it’s because the CAUT Annual Digest – the source for the data – includes all Presidents, even if they are not serving a full year, so there are a few “partial” salaries which bring the average down. My guess is that if you exclude those, you end up with a figure closer to New Zealand’s. But we’re nowhere near our neighbours to the South. For instance, the base pay of our highest-paid President (David Turpin) would place him about 250th in the US, or 118th among public university Presidents. (Santa Ono, in case you’re wondering, took a cut in base pay of about 20% to move from Cincinnati to UBC).

I suppose one might argue that this is all a kind of “if all your friends were jumping off a bridge” argument. There are other comparators one could use: hospital executives and senior public servants are the most obvious ones. But even here, I’m not sure this is such a great comparison. Neither of those are required to raise their own revenue from market and philanthropic sources to the extent a university President is. After all, with provincial government funds now providing less than half of university funding in many cases, one could argue that fairer comparisons might be with private industry. By this logic, some university Presidents – those say in Quebec or Newfoundland where provincial government foot well over half the bill – might be adequately or even over-paid, but equally the President of a place like U of T ($3 billion in revenue, less than a quarter of which is provincial grant) might be seen as grossly underpaid.

(I think this is probably right, btw. I’d argue that the scandal in Presidential salaries is actually how narrowly banded they are. The gap in executive pay between, say, UQ Abitibi-Temiscamingue and UBC should be a lot bigger because the latter is a hell of a lot of a bigger job).

The other favourite comparator is of course the Prime Minister/Premier (note that in the UK, the government is now proposing legislation to effectively prohibit university vice-chancellors from making more than the Prime Minister). After all, he/she is in charge of the Whole Damn Country/Province, why should anyone in a public position make more? There is some force to this (though one could apply it to the private sector too), but of course PMs and Premiers tend to make a lot of money in what amounts to deferred compensation – making speeches, sitting on corporate Boards, ambassadorships, etc. But if there is one thing that drives people crazier about university Presidents than their salaries, it’s the idea of deferred compensation (as the Samarasekera snit-fit shows).

Presidents are mostly former academics. Part of the academic compensation package is sabbaticals – time off from teaching every seventh year to pursue research interests. As far as I can tell, the idea of “administrative leave” – that is, a fully-paid year off after a five-year term in administration – was originally thought of as analogous in terms compensation. It’s not a perfect match of course – a year off after five years instead of six, full pay instead of 90% pay, etc, – but it’s close.

But some things about deferred pay weren’t analogous. Turning the leave into lump-sum cash payments for instance. David Johnston made off with over $1 million that way when he went to become Governor General without anyone saying “boo”, but when Amit Chakma tried the same thing at Western he got roasted. So no one does that anymore. In fact, a couple of contracts I’ve seen recently limit deferred compensation to a single year, even if the President serves for more than one term as President.

Are these perks similar to those seen in other countries, or are they Canadian universities’ way of surreptitiously bumping executive pay? I can find no evidence of this kind of compensation in either the UK or Australia (which doesn’t mean it doesn’t happen; just that a couple of minutes’ googling on my part came up dry). However, in the US, this kind of thing most definitely happens and on a much greater scale

Just to take a couple of examples found with a minimum of research: at the University of Florida, the former President got five years of deferred pay equal to his Presidential salary, though it was structured as a non-compete payment. At the University of Michigan, the President receives one year’s deferred compensation if he stays at the institution – but he also is guaranteed a $2 million fund to start up a new laboratory. In many cases, US universities (public and private) don’t offer salaried administrative leave, but do offer boatloads of “deferred payments” which are booked in the year they are earned, and counted separately from base salary (some examples here on p.3). More broadly, US university Presidents also seem to benefit from a variety of other perks which may not be available to Canadian ones.

In other words, while our Presidents are well-paid, there’s no obvious reason to think they are vastly overpaid either. And if we have a problem with the idea of deferred compensation, fine: just fold that extra compensation into their salaries during their term and be done with it. Presidents could then save it, spend it, do what they want with it. This arrangement would be clearer, cleaner and more transparent than what we do now.

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