New University boss wants a pay cut. But what about our CEO's?

Peter Switzer
26 August 2024

As Voltaire once observed: “Common sense is not so common” but the new vice chancellor of Western Sydney is giving it a go, actually decrying what the daily heads of our universities get paid and asking for a pay cut!
Professor George Williams and his willingness to be paid less not only shines the light on what vice chancellors get paid here in Australia, it should even make us ponder what CEOs of big listed companies pocket, especially in light of the Alan Joyce saga at Qantas.
To keep this in your head, let me show the Yahoo Finance.com website’s 2023 look at the pay of our highest-rewarded company bosses:


Now let’s compare this to what the SMH’s Danielle White shows us about what our top vice chancellors get paid.

One fact that stands out is that our top university heads average around $1.1 million, though Margaret Gardner, former vice chancellor of Monash, did well on close to $1.6 million. Professor Williams reckons his new job’s remuneration should equate to a public service secretary that heads up a key department of government.

His predecessor was on $1,068,133 but Williams is advocating a 20%-25% pay cut, which would take him down to around $800,000. “The lowest paid federal secretaries are in the Department of Industry, Science and Resources and the Department of Veterans’ Affairs, who earn $809,130 a year,” White reports. “Education Minister Jason Clare said a new governance council currently being set up would examine how universities set remuneration policies for their senior staff.”

So, change could be coming for our top university heads but there are those who say the pay level is OK.

White points to Professor Emeritus Frank Larkins, a higher education researcher at Melbourne University, who thinks the pay rates are justified, given they were presiding over complex organisations with large budgets. However, Oxford University higher education expert Professor Simon Marginson thinks a vice chancellor shouldn’t earn much more than the highest paid professors.

Others argue that less foreign students coming to our universities means less work and less money will be coming to the bottom lines of universities.

On an overseas comparison, our vice-chancellor pay is similar to the UK. According to the Office for Students, the Vice-Chancellor of Cambridge was the fifth best paid in the country in 2019-2020, with the University of Essex’s Vice-Chancellor the best paid at £584,000. This equates to around $1.1 million.

Interestingly, the head of Harvard in 2021 was paid $1.3 million, while in 2012 Business Insider reported the top person at Columbia University was paid, wait for it, $3,389,917. But that was 2012!

When it comes to top people being overpaid, we can blame the Yanks, who’ve come up with the old line that “if you pay peanuts, you get monkeys!”

I think many of our CEOs are over-compensated for their hard work. While CEOs do work hard, some are paid too much compared to their share price performance.

As an example, take Ruslan Kogan, founder of Kogan.com, who was on $17 million a year. Now look at the chart of his company’s share price below.

 

That’s not great and he isn’t the only one on big pay where his company has done poorly over the past year. There was a time when Kogan performed well over the Covid lockdown period and a good reward was defendable, but since October 2020 when the share price was $25, it has fallen to $4.

I rest my case.

A million dollars a year for running a big organisation such as a university looks more acceptable than some of the outrageous amounts that we find for some of our so-called top CEOs.

Recently, a Qantas review of pay to its former boss decided Alan Joyce should be denied $9.36 million in short- and long-term bonuses for 2023, reducing his package for that year from $24 million to $14.9 million. While many would argue that this pay is still too excessive, at least it’s a good sign that boards are getting more real on excessive pay packets.

By the way, he took over Qantas in the GFC when its share price was $2.50, and it peaked at $7.35 before the Coronavirus came to town. When Joyce left it was around $5.28. While the share price performed well under his leadership, his rewards were excessive.

 

 

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