Global Warming Solutions and Herding Cats
Holding a big event at Williams is like herding cats. In an institution run by independent and motivated professors and administrators, getting collaboration and consensus is very difficult. That is why I’m very proud to announce plans for Focus the Nation, an event which really will capture the attention of the entire school, at least for a day.
A little background on Focus the Nation: conceived of and promoted by Eban Goodstein ’80, this day-long symposium for global warming solutions will take place at over 1500 schools, churches and businesses across the country. Held on Jan. 31st nationally, the eve of super Tuesday, the goal is to engage 5 million citizens in active and intelligent conversations about global warming solutions.
The classic problem in any sort of activism is that when you throw an event, only the people who are interested come. In order to address this age old problem, we’re going to the students. Starting in September, we embarked on a campaign to speak to every single faculty member individually and ask for some or all of class time on February 5th to discuss climate change from the stance of their department. To speak to over 300 faculty is a big project, and I applaud Meredith Annex ’11 and Martin Sawyer ’08 who have coordinated those efforts.
Its paying off. Currently over 60 faculty will use between 5 minutes and all of their class time to talk about where their passion for a better world intersects with their discipline and subject matter. And more new commitments are coming in every day. We’ve actually been surprised at how many faculty are genuinely eager to participate in an event that addresses a big issue and uses their particular strengths. Maybe it’s not that surprising after all.
Salary “Pressure”
David Zimmerman is an outstanding scholar and, by reputation, an excellent teacher. But, even the best and the brightest among us occasionally get things very wrong.
The jump in salaries and benefits this year has caused speculation as to why college presidents earn significantly more today than in years past.
According to David Zimmerman, chair of the economics department and a participant in the Williams Project on the Economics of Higher Education, there are two primary reasons for the increase in salaries. “The compensation for highly competent CEOs in the private sector is very intense and more people who have been college presidents have private sector opportunities,” Zimmerman said. As a result, “there is some pressure for presidents to be compensated with salaries comparable to outside academia.”
Zimmerman said that at one time, presidents earned only two to three times what full professors earn.
Precisely which “private sector opportunities” do college presidents and senior faculty/administrators at places like Williams have outside of academia?
The short answer: very few, and almost none that look better than being a tenured college professor. How can I be so confident when I am not privy to the job offes that come flowing into the mail boxes in Hopkins Hall everyday? Simply because so few senior academics at places like Williams ever take such jobs.
Presidential Compensation for Peer Institutions
Once again, David is on the warpath about Morty’s level of pay and compensation. Yes, $325,849 in salary and $423,005 in total compensation is a lot of money and I would gladly accept that salary. But perhaps excellent leadership costs that much on the open market.
To get a sense of this question, I compiled a data set with presidential salary, benefits, total compensation, college expenditures, college revnues, average compensation for full professors, enrollment, the year the President was hired and endowment for William’s Peer Institutions (defined as the top 25 liberal arts colleges in the US News & World Report plus NESCAC members).
Morty’s pay ranks 8th out of the 27 schools.
Morty’s total compensation ranks 4th out of 26 schools (Hamilton’s outgoing President received defered compensation that ballooned his compensation over $1 million).
So, Morty is paid well, but there are at least other schools willing to pay their President’s more.
However, one might argue that schools with larger endowments and enrollments are more complicated to run than smaller schools, so Presidents should be paid more. So I ran a set of regressions controlling for most of the variables in the data set. The idea is to get an estimate of how much a president at a hypothetical school like Williams would be paid on average.
The bottom-line is that Morty makes more than the average college president. A hypothetical top 25 liberal arts college like Williams might pay its President $317,343 — meaning that Morty is overpaid $8,500 or so. With regards to compensation, the Morty premium is higher. An average hypothetical institution would pay its President $391,497. Morty receives $423,005, so the difference is $31,508. The salary figure is well within the 95% confidence interval for the predicted pay, but Morty’s total compensation is right on the edge of the 95% confidence interval. I take this to mean that Morty’s benefits are probably above average (and David should probably direct his ire towards the benefits package rather than the salary).
This quick analysis does not mean that Morty is necessarily overpaid. If you think Morty is a better leader than the average college president, then his extra skill might be worth the slight premium.
Of course, it is also possible that Williams’ peer institutions are schools like Dartmouth and Brown and not liberal arts colleges. The data set is small and does not include every possible comparison school (I spent longer compiling it than I should have). Selection bias might plague the analysis. Indeed, David could argue that all of the top liberal arts colleges are overpaying their presidents.
The goal of the post is simply to place Morty’s compensation in perspective.
Morty’s Salary
I got to ask my question about Morty’s salary at the Boston area alumni event last week. Unfortunately, I failed to prepare the precise wording of the question ahead of time — operating under the delusion that I can speak coherently off the cuff — and so jumbled things a bit. I tried to ask something along the lines of:
Grant for the moment that Morty’s $400,000 annual package is fair and appropriate. But, certainly at some point, the President’s salary would be too high. How high is too high? At what point should I, as an alum asked to donate time and money, start to worry that the College is paying its President too much? If I am at this same event five years from now, would there be any problem with the President’s salary being $500k or $800k or $2 million?
I got two answers, both of which are true and reasonable but, to my mind, unconvincing.
1) Morty’s pay is similar to that of other presidents at peer institutions. This is true, but just because Amherst overpays its president is no reason for Williams to do the same.
2) Morty has a very complex job. Someone in the business world with similar responsibilities (in terms of number of employees and annual budget) would make much more. Again, this is true but irrelevant. The Governor of Massachusetts, the Secretary of State and the Commanding General of the First Marine Division all have jobs that are at least as complex and, almost certainly, more important than Morty’s, yet they each get paid much less. If Morty wants to make the big bucks, he should go into business.
Again, I stand second to none in my praise for the excellent job that Morty has done and in my expectation that he will continue to be an outstanding president. I know of no one who has written more public words of praise of his performance than I have. But $400,000 is too much. Why should I give charity to an institution that is so wealthy that it can afford such a lavish package?
Of course, Williams does have to pay its President something, just as it needs to pay its professors. But as a non-profit, it must take issues of compensation very seriously. If it were me, I would set assistant professor salaries at national norms, call it $50,000 and have full professors max out at 2 times that, with the presidents salary set at 2 more times that.
Anyone, after Morty, who does not think that being President of Williams is the job of a lifetime, even at $200,000 per year, is probably not the person that you want for the job.
