College leaders newest pay superstars

by Stephen Butler

THIS STATE certainly has its share of Marie Antoinettes, and not all of them are female.

The latest collection includes the senior management of the University of California system whose annual salaries plus retirement benefits, under careful analysis, appear to run into the millions. Pausing to reflect for a moment, I'm reminded of a comment made by Steve Hebert, a friend from childhood who spent a career that included negotiations regarding pay for senior university officials. He pointed out that finding a college president is one of the hardest recruiting jobs.

In a single person, we have to find someone who has four basic attributes. First is a doctorate - any Ph.D. will do - so as to command the respect of professors. Second is an ability to raise money - essentially some sales ability. Third is the ability to manage a large organization. And fourth is the ability to understand and relate to the constituencies of students, parents and neighbors in the university community.

It's relatively easy to find a person with two or three of these abilities, but rare to find anyone who is strong in all of them. Yet, running a university is a high-profile job conducted under a microscope. Any weakness becomes apparent pretty quickly.

I have less of a problem with the actual salary levels of $400,000 to $600,000 for top management running a $19 billion organization. What bothers me are compensation features like the reported $230,000 lifetime annuity or retirement benefit promised to UC President Mark Yudof if he stays for at least five years. That's the equivalent of handing him a check for almost $4 million (the upfront cost of that lifetime annuity) as he walks out the door. It's almost an extra million per year over and above the $600,000. As Ronald Reagan used to say, "Here you go again "..." We're making a promise that we don't have to pay for today. It's become an epidemic in state government.

Meanwhile, there are extremely talented people running huge organizations in the federal government for comparatively small amounts of money. Top military commanders come to mind first, but then there are all those civil servants with the G-series pay rankings who seem content to take on major challenges for $100,000 to $200,000. Time and time again, anyone managing a company is told by compensation consultants that pay is not the most important motivating factor for employees.

To take it to the extreme, during World War II there were the "dollar-a-year" men who came from executive ranks to work in Washington for nothing.

So, why can't we seem to find university managers who would gravitate to the lifestyle, challenges and status for less money? To me, it would seem of utmost importance for one fundamental reason and that has to do with the contentious negotiations that determine the entire university pay scale. How can someone negotiate, with a straight face, a union contract that controls costs when the world knows that managers make (in this case) almost $1.6 million per year. Exorbitant pay at the top sets up a sense of entitlement that flows down through the ranks. That's why we have pension promises to today's state employees that are totally unsustainable at any future tax rate.

I would tell the regents to offer $350,000 the next time out and be pleasantly surprised at how many talented people, with all four of those key attributes, show up for the interview. Someone taking the job for something other than the money might, for that reason alone, be a far better candidate.

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