The NY Times reports that University Presidents continue to be paid quite well. The Marginal Revolution blog reports that coaches are earning larger raises than these Presidents. An ongoing economics literature has studied CEO pay and how it tracks corporate performance. A famous early paper is available here. Another well known paper documents that CEOs often receive big pay for good luck. For an accessible overview of executive compensation that argues that CEOs are paid for performance, read this.
I realize that University Presidents are not corporate CEOs (but do they know that?). In the case of evaluating University Presidents, what is the right performance criteria? In the case of public firms, their firm’s daily stock price contains information that is continuously updated. What new information arrives about the performance of the University Presidents? Given that a University is a bundle of a zillion things, how do you tease out the President’s value added? On the supply side, why isn’t there more competition for University President slots? Why can’t a tenured associate professor be named President if she has the “right stuff”? Why must entry barriers of previous service as a Dean or Provost be introduced?