Three dozen private college presidents made more than $1 million in 2012, according to the annual analysis by The Chronicle of Higher Education.
According to the report, the highest-paid president was Rensselaer Polytechnic Institute's Shirley Jackson, who earned $7.1 million in 2012, the most recent year for which federal tax documents containing this information are available. On average, presidents earned about $400,000. The year prior, Robert Zimmer from the University of Chicago was the highest-paid president, with a salary of almost $3.4 million.
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To determine these numbers, reporters examined 2012 IRS Form 990s and Department of Education (DOE) filings from 497 schools, which generated data for 537 presidents who served for at least part of the calendar year.
This year, the report counts pay only as the amount the president actually received. It does not include deferred compensation or retirement pay to ensure the same dollars are not counted in future years. To make figures comparable, the same rules were applied to past years' figures as well.
Jackson's payout is so high because she accumulated deferred compensation for 10 years, says The Chronicle's Jack Stripling, and 2012 was her payout year. The practice is quite common in higher education, he asserts, to make sure presidents do not leave for another position.
"The deferred compensation was provided so that we would be able to keep the president involved... it vested only after 10 years, so if she'd left, she would have lost it," says Arthur Gajarsa, Rensselaer's board of trustees chairman. "She's worth what we paid, because she has done the job magnificently, and taken the university to a different level," he added.
The incentive strategy is borrowed from the private sector, says Stripling, but has been part of the higher education playbook for years. As he explains, this is because "the people who run the boards that oversee these various institutions often come from corporate America."
However, the sectors do differ in terms of taxes, and Stripling cautions universities to keep in mind the appropriateness of compensation, given the exemptions afforded to them.
Although some salaries may seem high, "there's this perception out there that there are only a handful of people that are qualified to run these large, complex organizations," says Stripling.
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According to The Chronicle, the highest-paid president relative to budget was John Klein of Randolph College—who earned just over 2.9% of the school's 2012 overall budget, compared with the average 0.5%.
Leadership at the schools generally defends the salary levels, says Striping, because of fundraising success and other transformative initiatives by presidents. "They will say that the return that they get on the investment in this individual is tenfold, 50-fold what the individual makes," says Stripling.
However, William Destler, Rochester University president, says the salaries are a "source of some concern" and "increasingly hard to justify."
Destler says he puts 30% of his annual pay ($875,046 in 2012) toward university scholarships.
Although boards usually compare their own presidents' salaries to peers' at similar schools, Destler says they should actually examine what "the compensation need[s] to be to get a person to do a good job" (Kambhampati, Chronicle of Higher Education, 12/8; Sanders, NPR, 12/8).
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