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Education Stats The Almighty Buck News Technology

Are CEOs Overpaid? Not Compared With College Presidents (cbsnews.com) 309

schwit1 writes: For outrageous executive earnings, don't look to Wall Street -- look to academia. High pay for CEOs attracts annual attention and recitations about the immorality of capitalism, but when the focus is on average CEO pay, they make less than half the annual earnings of college presidents, according to CBS News. The average CEO earns $176,840 annually, an amount that would make a university president into a pauper. In academia, college presidents earn $377,261 annually. Americans outraged and indebted by high college costs will be quick to draw the parallel between a college president's pay and their tuition bill. Correlation, though, doesn't imply causation. College presidents aren't always the highest-paid college employees -- athletic coaches often earn more. Regardless, college presidents "are well into the 99th percentile of compensation for wage earners in the United States," Peter L. Hinrichs and Anne Chen noted for the Federal Reserve Bank of Cleveland.
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Are CEOs Overpaid? Not Compared With College Presidents

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  • by Anonymous Coward on Sunday February 28, 2016 @03:49PM (#51604225)

    classify the businesses into upper, middle and lower groups and redo the comparson.

    • by ohieaux ( 2860669 ) on Sunday February 28, 2016 @03:54PM (#51604263)
      A university president may make $500K, but s/he oversees 5000+ employees, 30,000+ students, a campus of 250+ buildings and an endowment of a billion or more. I'm not sure they should be compared with the set of all folks calling themselves CEO.
      • by ArchieBunker ( 132337 ) on Sunday February 28, 2016 @04:02PM (#51604315) Homepage

        If they fuck up really bad do they still get the golden parachute?

      • by chipschap ( 1444407 ) on Sunday February 28, 2016 @04:22PM (#51604417)

        A university president makes little compared to a university football coach. The absurdity is incredible.

        • Where I live they just posted the local university salaries in the paper. The president was 4th after the football coach, the assistant football coach, and the basketball coach. All of them are way over paid but I am most angry about the fact that the football coach made 4x what the president made.
          • It varies by school but college football generally pays for itself.

            • by similar_name ( 1164087 ) on Sunday February 28, 2016 @05:30PM (#51604757)
              A few of the big name schools make money from their football programs, most lose money.
              • Re: (Score:3, Interesting)

                by Etherwalk ( 681268 )

                A few of the big name schools make money from their football programs, most lose money.

                Most lose money on the football program itself, but it still pays for itself or even brings in a lot of money through *donations* that they are able to encourage because people respond irrationally to football.

            • by 50000BTU_barbecue ( 588132 ) on Sunday February 28, 2016 @05:37PM (#51604809) Homepage Journal

              Odd that the NFL needs to go begging for public funds to build their stadiums, isn't it? Those billionaire beggars have no shame.

              • A couple of things.

                1) those stadiums aren't just for football.

                2) no city is obligated in any way to build a stadium for the NFL. And the NFL isn't obligated in any way to provide team for any particular city....

            • I'd like to see some data on this. From what I've seen, it depends on how you allocate costs. Football brings in a lot of money but the athletic programs, overall, lose money. (Badmitton just doesn't have the same draw). But I don't know which share of the costs are assigned to less popular sports. If those were shut down (and not shouldering a loss) would football still be able to show a profit? I don't think so. Only at the top few I would imagine. Part of undergraduate tuition is an athletic fee.
              • Football showed a profit before title 9 forced all the major universities to create all the minor sports programs you mention.

                It's going to be real hard to convince me that football doesn't turn a profit at any school with more than a 10,000 seat stadium. Which is all the Division 1 schools.

        • Why do you think it's absurd? I assume you believe that any kind of supply and demand based salary is wrong? What are the other possibilities?
        • When you compare how much money a top level football program brings into the university to a coach's salary, the coach's salary is peanuts. Not all college football programs show such large profits, but the majority of them pay for themselves.

          I went to school at the University of Alabama (1971-1975), and yes, Coach Saban makes more money than God. He also brings in millions more for the school to use for things other than football. Good deal for what we pay him.

          I know every college football program can't be
      • A university president may make $500K, but s/he oversees 5000+ employees, 30,000+ students, a campus of 250+ buildings and an endowment of a billion or more. I'm not sure they should be compared with the set of all folks calling themselves CEO.

        On the other hand, CEO's are at much greater risk of being prosecuted for the actions of employees.

        • On the other hand, CEO's are at much greater risk of being prosecuted for the actions of employees.

          Do you have any stats handy on how likely CEOs are to be prosecuted for "actions by employees"?

          AFAIK few CEOs have been prosecuted for anything in recent decades, and usually it is for their own direct transgressions. Law-breaking ordered by a CEO is not "actions of employees". And paying civil fines is not "prosecution".

      • by Kohath ( 38547 )

        ...s/he oversees 5000+ employees, 30,000+ students...

        Hmm, 1 employee for every 6 students... I think maybe I found the cause of your spiraling university cost problem.

        • ...s/he oversees 5000+ employees, 30,000+ students...

          Hmm, 1 employee for every 6 students... I think maybe I found the cause of your spiraling university cost problem.

          Yes you are right - the size of the administration relative to the student body has doubled in the last couple of decades, without any evidence that I know of that they were "under-administered" before. And the growth of university administrator salaries is part of this "management" bloat.

          In both U.S. corporations and at colleges and universities we need a movement back to earlier, more sane, levels of staffing and pay.

    • and we can't have that. At least, as far as one side knows...
    • classify the businesses into upper, middle and lower groups and redo the comparson.

      I'm sure there's plenty of 5 person universities to keep the comparison fair.

    • by Xyrus ( 755017 )

      This article is such a steaming pile a third grader could have done a better job. There are so many statistical fallacies here it makes climate denial blogs looks like paragons of statistical analysis.

      News for nerds? This isn't even good enough for tabloid rags.

  • by phantomfive ( 622387 ) on Sunday February 28, 2016 @03:50PM (#51604227) Journal

    The average CEO earns $176,840 annually, an amount that would make a university president into a pauper

    Are they including self-proprietorships or something?

    • or any other compensation (stocks ...)

      • by Roger W Moore ( 538166 ) on Sunday February 28, 2016 @05:19PM (#51604703) Journal
        The statistical analysis in this article is absolutely appalling. First you are right that they are not comparing to real CEOs. If you look at the data [bls.gov] they use for the CEOs this apparently includes local and state government managers and, even worse, primary/elementary and secondary/high schools by which I presume they mean the head teacher which I don't think anyone thinks off when you say 'CEO'.

        If you just look at the "Management of Companies and Enterprises" category then the average wage amount increases significantly to $210,120 but as you note there is no mention anywhere in the article at all about bonuses and it specifically mentions "wages" so I doubt that this is in any way representative of the actual compensation a CEO gets while the article clearly states that they included all bonuses paid to university presidents. This is clearly an appalling abuse of statistics and so any conclusions the article draws cannot be trusted.

        ...which is sad because I actually think they have a point which their article actually does contain the evidence for if only they knew how to analyse it. If you look at the distribution of compensation then you will note that there is a significant tail out to insanely high values and this is where the problem lies. University presidents should get a high salary - certainly higher than the faculty and staff that they manage unless there are exceptional circumstances e.g. Nobel prize winner - but I fail to see how $1m+ salaries can be justified.

        In fact the last time the university where I worked advertized for a president four faculty from Arts wrote a joint, open application for the job (which was shared with the local media) to protest against these ridiculously high presidential salaries. As they pointed out you could hire all four of them, give them each a very significant raise (IIRC 50%) and still save money over the out going president's salary and this way they would be able to do four times as much work. Needless to say they were not offered the job!
        • University presidents should get a high salary - certainly higher than the faculty and staff that they manage unless there are exceptional circumstances e.g. Nobel prize winner - but I fail to see how $1m+ salaries can be justified.

          If the university president manages to raise $50million in donations, he's worth the $1million salary. You justify it in practical terms.

          The world doesn't pay you for studying hard, or because you have experience, or because you won a prize. It pays you in exchange for what you can give to it.

        • If you just look at the "Management of Companies and Enterprises" category then the average wage amount increases significantly to $210,120 but as you note there is no mention anywhere in the article at all about bonuses and it specifically mentions "wages" so I doubt that this is in any way representative of the actual compensation a CEO gets...

          Yep. It is normal for top execs to have 100% performance bonuses, which they invariably get if they are simply competent enough to keep their jobs. You can see this stuff in SEC filings for publicly traded corporations. And even wage + bonuses does not take into account other methods used to enrich the guy at the top: stock options, severance packages, expense accounts, company cars, etc.

    • It's probably the median. Mean is skewed by grossly disproportionate pay at the high end, so median is in fact the correct figure you want to be using for this comparison. Mean however is the correct figure to use when evaluating how much money is going to CEOs instead of regular workers. From some quick googling, the $177k figure does include benefits and stock options.

      Median is what you want to use to see how much pay the [average CEO] makes.
      Mean is what you want to use to see how much [the average
  • salary? (Score:5, Insightful)

    by SYSS Mouse ( 694626 ) on Sunday February 28, 2016 @03:52PM (#51604245) Homepage

    Are they just talking salary? As far as I know university presidents don't have stock options.

    • You called it! (Score:5, Insightful)

      by Ungrounded Lightning ( 62228 ) on Sunday February 28, 2016 @04:06PM (#51604333) Journal

      Are they just talking salary? As far as I know university presidents don't have stock options.

      You called it. Stock, bonuses, and golden-handshakes are where the money is. The salary is just covering "base load", to keep the wolf away from the Yacht's dock gate while the company isn't doing well enough that the big bucks aren't flowing adequately.

      That's why turnaround CEOs can do the "dollar a year salary" thing for P.R. without hurting themselves financially.

      • Turn around CEOs generally are experienced (i.e. loaded) and therefore could literally take zero compensation and not risk their lifestyle. Taking a high risk job with zero compensation guarantee is a good bet for them, if they win, they win big, if they lose, at least they weren't bored for those 2-4 years, and of course they're not putting their own assets on the line, just the company's shareholders.

        • by creimer ( 824291 )

          Turn around CEOs generally are experienced (i.e. loaded) and therefore could literally take zero compensation and not risk their lifestyle.

          This has more to do with taxes on earned income. If a CEO takes a $1M salary, the top tax rate for earned income is 39%. If a CEO takes $1 salary and stock options, he pays no taxes on the earned income and the top tax rate for long-term capital gains is 20%. Whenever a CEO takes $1 salary, he's not doing it out of charity.

    • Are they just talking salary? As far as I know university presidents don't have stock options.

      It is also a profoundly stupid critique in the first place. University Presidents are not only responsible for the whole university, but they are responsible for bringing in massive amounts of money. Your job is not only to provide leadership and support leaders underneath you, but to bring in the millions of dollars in donations that your school can use to expand its programs, increase financial aid, and keep tuition increases low.

      If you were on a University Board of Trustees, wouldn't you want to spend

    • Are they just talking salary? As far as I know university presidents don't have stock options.

      A lot of companies are big enough to have a CEO but are not traded.

      • A lot of companies are big enough to have a CEO but are not traded.

        Most CEOs work for privately-held, non-publicly traded companies.

    • by hey! ( 33014 )

      Yeah, but college presidents are "the elite". They got where they are by being intellectual and understanding things most us don't. CEOs -- by which I especially mean the CEOs of big companies -- got where they are by embodying the virtues and character traits most admired in our society.

    • They have the golden retirement option that doesn't exist in the private sector. I have to put my own money away for retirement. And my health care isn't paid for before I reach medicare status. Nobody is paying me 80% of my current salary to not work when I'm retired.

  • by Zelucifer ( 740431 ) on Sunday February 28, 2016 @03:53PM (#51604249)

    " If college presidents were to divide up their pay and write out checks to all their students, the per-person payout would be fairly low, amounting to no more than $300 per student."

    The article is about the cost of overall administrative overhead, not just college presidents. The summary itself is even more misleading, as it attempts to compare base salary's between two very disparate fields. A CEO of a normal "wall street" company makes on average 20% of there income as salary. The rest of there income comes from bonuses, benefits and incentives. A large percentage of which is in the form of stock, something a college will not offer.

    • The question is phrased in a manner that is designed to draw out a pre-defined conclusion.

      The question should be:
      1. Are CEOs overpaid?
      2. Are College presidents overpaid?

    • by ceoyoyo ( 59147 )

      "The article is about the cost of overall administrative overhead"

      Yup. There's a question worth asking. And don't stop at CEOs and presidents. What do all of the people who "supervise" make combined, compared to the cost of the people actually doing the work, and the material costs of actually making something?

      I just got an e-mail that someone was appointed to a newly created office of assistant dean (of the faculty, not the university). Apparently the vice dean got tired of doing all the work so he nee

  • If you look a true corporations and compare them based on size, most mid to large companies give their CEOs salary, bonus and stock. With stock usually increasing their pay by a multiple (ones I've looked at are 4-7x).
    • But the article also states "Presidents at research universities who are within the 75th percentile of pay are pulling in an average of $1.18 million, compared with $280,974 for presidents at four-year institutions focusing on the arts and sciences."
  • Easy college loans inflates salaries for college presidents.

    Easy Fed money inflates salaries for corporate presidents.

    Reforms are long overdue for college loans and monetary policy. Reduce easy money, watch salaries deflate.

  • Big Education (Score:2, Insightful)

    by BECoole ( 558920 )

    Brought to you courtesy of Big Govt handing out Big Money and encouraging Big Student Loans.

    This is what happens when an industry is subsidized.

    • by Nemyst ( 1383049 )
      Not entirely true, actually. Canada tuition is low, loans are much rarer than in the US, but a lot of university presidents still rack in 300-500k/year. This is largely about people in a position of power abusing it to give themselves money.
  • by Mike610544 ( 578872 ) on Sunday February 28, 2016 @03:59PM (#51604301)
    For a college w/ 10,000 students, that's about $37 of their annual tuition. So for an average tuition of $29,056 that's about 0.1%.

    Can offering a competitive salary for the college president improve a student's experience by 0.1%? I'm guessing yes.
    • Can offering a competitive salary for the college president improve a student's experience by 0.1%? I'm guessing yes.

      I am going to guess no. I suspect that a bad president may be able to degrade a student's experience by 0.1%, but where is the accountability? CEOs and others can do a bad job and still get a golden handshake.

      Taking your argument further, imagine that, as a successful employee, I increase the company's revenue by 10x my salary. I should be paid 10x what I am being paid, right? Except tha

  • ...And let's not get started on college football coaches.

    • by creimer ( 824291 )
      I'm always amazed that local school districts in California never have enough money to reduce class sizes, buy supplies and renovate buildings. But if a new football field was needed, money was always available and got built in a hurry.
  • by Tom ( 822 ) on Sunday February 28, 2016 @04:25PM (#51604425) Homepage Journal

    Are they total idiots, or being paid?

    Of course the average CEO doesn't earn a killing. I'm a CEO. I make less than I did when I had a regular job.

    The problem has never been the average CEO. The problem is the high-end CEOs. The guys who run banks, fortune 500 companies and such, who earn several thousand times what normal employees or, in fact, average CEOs make.

    • The problem is the high-end CEOs.

      A problem for whom?

      The megalo-CEO's like it just fine. The government creates a regulatory environment to ensure megalo-corps can out-compete the small businesses, precisely to create more ultra-rich.

      Every politician who promises to soak it to the rich, to get votes, needs rich to soak, to get votes. In a democracy, they still need to get the votes, therefore they need to have the rich. Since they seek power most of all, and votes get them power, and votes require the ric

      • It's a problem for the owners of the corporation. In publicly traded companies, there is a separation of ownership from control. This level of CEO pay causes two problems. The first is that it's like a tax. Granted it's a small tax relative to profit. Second, there's no way you can expect the rank and file to stay motivated when they can't afford dental care due to their low pay and the CEO just bought a new yacht.
  • by PopeRatzo ( 965947 ) on Sunday February 28, 2016 @04:46PM (#51604521) Journal

    Holy moly, this story is a lot of horseshit. There are one thousand, eight hundred and forty five private universities in the US. In 2010, there were 27.9 million businesses in the United States, and 18,500 or so have more than 500 employees. That means that at least 27.8 million of those businesses are what you'd call small businesses, which can mean one employee who happens to be the CEO for his little corporation that sells t-shirts on Etsy. I guarantee that the average salary of one of those corporations with more than 500 employees is a great deal more than the average university president where there are more than 500 employees.

    So what we have here are two things being compared. One of which is defined and the other which is not. Does anyone know what you get when you take the average of something that is not defined?

    I swear to Jesus, it's no wonder people are so dizzy that they're willing to vote for the spawn of Biff Tanner and Benito Mussolini for president. This is what they get for news.

  • They compared the average salary of nearly 700 private, for profit colleges/universities against the average of all self-identified CEOs.

    They excluded any president from a state college/university.

  • How about comparing it to CEO's of companies over a 1000 employees? Are they still only making 170k a year?
  • CEO / college president

    They run the show and see to profits. They seek investors, do public relations and try to create a culture of success.

    The problem seems to be that some expect college presidents to be saints, and therefore to work for a pittance. Since some schools are run by government, non-profits or churches should we expect that they are not a business? Well sorry, that's wrong. Schools are a business and their presidents are expected to bring in money just like any CEO.

    • by garyebickford ( 222422 ) <gar37bic&gmail,com> on Sunday February 28, 2016 @06:48PM (#51605207)

      Actually college administrator salaries have increased far above (IIRC more than double) the rate of college tuitions (which is about three times the overall inflation rate), while professor pay has languished and benefits have been decreased, to the point where universities in particular have resorted to eliminating tenured and full time positions, keeping large teams of part-time instructors, kept judiciously below the number of teaching hours that would trigger full time benefits - shades of fast food!

      The pay inflation of college presidents has far exceeded that of the average for corporate executives. This difference largely tracks the inflation of federal subsidies for higher education - in other words, the administrations have succeeded in rent-seeking at the expense of students and taxpayers. Today, with grants and loans, it is as hard for a family to pay for college as it was before the federal subsidies were expanded, while the taxpayer now has to toss in an additional large amount. The net result of the expansion of federal money has done nothing but line the presidential pockets.

  • All the above are Executive Compensation.
    How many shares in Princeton are traded? Oh, wait, zero
    Yet another example of selective citation by a rightwinger
  • A CEO salary varies a lot. A small business CEO might even earn $0 for a few years. So of course the average is low.

  • by Beeftopia ( 1846720 ) on Sunday February 28, 2016 @07:59PM (#51605591)

    That's the search term I'd be looking for, to compare college presidents to CEOs. With that search term, I keep getting hits for average fortune 500 CEO salary, and the range is from 10.5 million [chron.com] to 13.8 million. [businessinsider.com]

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