Board of Regents to Consider Executive Salary Equity Initiative
Retention and attraction of top talent to lead the University of Nebraska and its campuses are the goals of an executive salary equity initiative to be considered by the Board of Regents at its meeting on September 5. The equity initiative, to be funded by private donations to the University of Nebraska Foundation, seeks to more closely align the base pay of the university president and the four campus chancellors with the average salaries of academic leaders of comparable institutions. The initiative is being proposed by a working group of the Board of Regents, led by Regent Jim McClurg, which was asked by the Board to study the competitiveness and fairness of NU's executive compensation and to make recommendations.
"The competition for excellent leadership within higher education is intense," McClurg said, "and salaries have risen with the demand for top talent. We compete in a national and global market for key leadership, and salaries for executives at the University of Nebraska are not keeping pace with those offered by similar institutions elsewhere." McClurg said the Board's compensation philosophy for faculty and staff has been to advocate for salaries at the midpoint of peers to assure successful recruiting and retention. "We must also offer reasonably competitive salaries to our senior academic leaders who contribute significantly to the quality of our institution and play a critical role in positioning our state for economic success."
A survey of base salaries for academic leaders in higher education institutions comparable in size and scope to the University of Nebraska system and each of its campuses found that all of NU's leaders are paid below the midpoint of executives of comparable institutions. The salary gap, based on salaries paid in 2007-08, ranges from approximately 5% behind peers for the chancellor at the University of Nebraska at Omaha to nearly 31% behind for the chancellor of the University of Nebraska Medical Center. The proposed salary equity initiative seeks to eliminate over a two-year period the gap to the midpoint of comparable institutions for all five executives. However, all five salaries will continue to lag behind the average paid to the leaders of each of the Board of Regents' approved peer groups, which are the basis for faculty salary comparisons.
"We do not expect or strive to be at the top of the list of the highest-paying public universities," McClurg said, "but we don't want to be last on the list either. Our goal is to be reasonably competitive, and we know we will have to be when we go into the market for new leadership. It seems appropriate to address this when we have excellent leadership in place. It does not seem fair to adjust compensation only after a good leader has left. We want to be fair to the incumbents who hold the positions now, and to make it attractive for them to remain at Nebraska. And we want to ensure that salary competitiveness at our university will not be a barrier to attracting top candidates for these critical leadership positions in the future."
The proposed salary equity initiative will be funded entirely by private donations, not taxpayer support or tuition revenue. McClurg said the Board of Regents is fully aware of the challenges of the state budget, which is why the University of Nebraska Foundation was approached about supplementing base salaries with private funds. The Foundation's Board of Directors, which is comprised largely of business leaders, unanimously endorsed the compensation initiative. Private funds will help "catch up" NU's executive compensation to the midpoint of comparable institutions over two years; public funds will continue to be used for annual raises, awarded on basis of merit, to "keep up" with the peers.
"Donors and supporters of the university have a strong interest in maintaining the momentum that has been achieved in recent years – as evidenced by record gifts and record transfers to the university," said Harley D. Bergmeyer, chairman of the Foundation's Board of Directors. "The Foundation Board believes strong leadership, fairly compensated, is essential to the university's long-term stability and continued success." Nearly one-third of all full-time professors, and some athletic coaches, benefit from private financial support also.
The following table illustrates the proposed total base salary for FY 2008-09 from all funding sources for the University of Nebraska president and each of the chancellors.
(State & Private Funded)
|UNO||John Christensen||$240,000||$ 5,515||2.3%||$11,280||4.7%||$256,795||7.0%|
|UNK||Doug Kristensen||$199,933||$ 8,637||4.3%||$ 8,797||4.4%||$217,367||8.7%|
|NU||James B. Milliken||$307,227||$44,852||14.6%||$14,440*||4.7%||$366,519*||19.3%|
* Annual merit increase subject to approval of the Board at the September 5 meeting.
State-funded merit increases for each of the chancellors have been awarded for FY 2008-09 and were effective July 1. The Board of Regents will vote on the president's annual merit increase in a separate action at the September 5 meeting. If approved by the Board, the privately funded equity increases will be retroactive to the beginning of the fiscal year. A second equity increase of a similar amount for each leader will be implemented next fiscal year to complete the Board's initiative. The funds have been budgeted already by the University of Nebraska Foundation.
"This proposal, which uses private funds for a public benefit, is fair to the individuals involved, and good for the university and the state," McClurg said.
Editor's Note: A copy of the survey listing the base salaries of the executives of comparable universities is available on our site at: Executive Compensation Salary Surveys