Vice-Chancellors: are their salaries and perks justified?

Students, universities, staff, PR… Who runs it all?

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When it comes to the hierarchy in universities today, generally the highest one could ever achieve is the role of the Vice-Chancellor.  Often considered to be at (or very near) the height of education, vice-chancellors boast extensive CVs that often stretch back several decades.

For example, Andrew Hamilton (the VC of Oxford University) completed undergraduate, postgraduate, doctoral work and even post-doctoral studies before becoming a Princeton University professor.  He’s even been awarded awards from the American Chemical Society and is a Fellow of the Royal Society.  

Not exactly your average administrator, professor or lecturer then.

Of course, you would expect whoever the person in charge of one of the most famous universities in the world was to be well-paid.  After all, years of hard work would warrant such benefits, wouldn’t it?  

That said, the figure is still extraordinary… Take a guess?  £150,000 a year?  Maybe even £200,000?

Wrong.  Try £424,000 a year for size.

To put this into perspective, the Prime Minister’s salary (for both being an MP and for being the PM) is £142,500.  Mr Hamilton, therefore, earns just shy of three times as much as the person responsible for running our country.

Of course, the argument is that Oxford University is possibly the top university in the country – and indeed the world, depending on your opinion – so perhaps the salary is justified.  However, even if you left the exclusive realms of the Russell Group (the group representing the ‘elite’ group of universities in the UK) you’ll find incredible rates of pay that would make many people’s jaws drop…

  • For the 2011-2012 academic year, Professor Neil Gorman, Vice-Chancellor of Nottingham Trent University, earned a £343,000.

  • Ending in July 2012, Bath University’s Vice Chancellor Professor Dame Glynis Breakwell earned £356,000 for the year in salary and benefits (though the University cut their pension contribution to £11,000 – down from £65,000 in the previous year.)

Perhaps the most high-profile case in recent times is that of the University of Warwick, one member of the Russell Group.  Students occupied the university’s council chamber in protest over a £42,000 pay rise given to Vice-Chancellor Nigel Thrift, bringing his salary to a total of £316,000 for the year.  The group argued that the money would be better spent helping to recruit disadvantaged students to Warwick.

Naturally, this forms quite a moral debate.  There are two very distinct sides to the argument…

On one hand, it is clear that being a VC is not an easy job.  Universities are multi-million pound organisations that are difficult to manage and concerned with the education of their students.  Many universities are at the very cutting edge of modern research and have been known to make important discoveries.

The role of the VC in a university is down to the individual establishment – one Uni might allow the VC to operate differently to another.  Oxford University, however, offers this as a rough guide:

The role of the Vice-Chancellor is to provide strategic direction and leadership to the collegiate University, and to position and represent the University internationally, nationally and regionally.  The Vice-Chancellor is also involved in securing and continuing the growth of the University’s financial base, and takes a principal role in the University’s fundraising, including the development of relations with alumni. He or she also carries out important ceremonial and civic duties, including matriculation and degree ceremonies.

I guess we could deduce from this that they’ve got quite a big job, then!  There’s fundraising, relations, important business decisions, ceremonies and strategies to develop and decide upon.  Your simple 9-5 job? Somehow I suspect not.

For comparison, In fact, it could be claimed that salaries for VCs are significantly lower than that of leaders in, for example, banking.  For example, in 2012, the CEO of Lloyds Banking Group Antonio Horta-Orsorio was paid, excluding bonus, over £2m for the year ending July 2013.

If you were to look at a more comparable example, consider this: Oxford University currently employs some 9,200 staff, all of which are managed by the VC.  In companies such as Volex plc (currently a player in the technology and telecoms industry employing 8,000 people) we have noted executive salaries of around £400,000 per year.  You could argue that therefore that Oxford, if anything, pays below the market rate if you look at it from an employee perspective.

Allow me to cite revenue as another indicator of potential success and use the Hilton Food Group as an example – the packaging business recorded £981m of revenue in 2011, similar to Oxford’s £931m.  The company’s Chief Executive Robert Watson was paid £512,000 for the year.  Suddenly, Andrew Hamilton’s salary is looking quite modest, isn’t it?  With such management skills, surely you’d be doing better in the commercial sector?

At the very least the argument could be that it is proportional to what is being managed.

Perhaps one of the strongest arguments for such salaries goes to those VCs who have managed universities in times of sustained improvement.

Let us use the example of Liverpool John Moores University.  Two years ago, the University ranked 111 on the Guardian’s rankings for Universities.  Last year, that became 98 and this year stands at 69th.  This rise up the rankings is surely a great achievement for Professor Nigel Weatherill, who is probably deserving of his relatively modest £186,000 salary (even more amazing is that figure is down from £229,000 for the previous year – a near 20% pay cut.)

On the other end of the spectrum, there is a belief that, with tuition fees trebling, budget cuts in the sector and, in some cases, jobs being axed, that a figure nearly triple that of our Prime Minister is grossly unnecessary.  With students paying up to £9,000 a year for their education and the government slashing budgets, we have seen several universities lay off staff amid budget cuts and reporting losses in financial statements.  Even at best some universities have not improved relative to the others in the UK, so how can you justify such increases?  At worst, some have fallen behind relative to everyone else.

I conducted a small investigation into league table results for universities and how much Vice Chancellors were paid. I looked at publicly-available annual financial statements (looking at the base salary of the VCs concerned) and used university league table results published annually by The Complete University Guide. Looking at historical data from the last four years, I identified 4 universities where I would consider the pay of Vice Chancellors to be worthy of close examination.

  • University of Buckingham – Professor Terence Kealey took a took a pay increase of £10,394 to £140,300 for the year ending December 2011 – a rise of just over 8% – despite the Buckingham University recording a drop of 22 places on the league table.  The university has dropped a further 13 places in the results published last year.  It will be very interesting to see what Professor Kealey was paid in light of this when the annual report is next published.

  • Glyndwr University – Professor Michael Scott’s pay rose by £8,449 for the year to a total of just over £185,000.  The university dropped 12 places in the league table during that period.  Glyndwr bounced back slightly (a 4 place rise) but then dropped to an all-time low of 115 in the latest results.

  • University of West London – Professor John Peter was appointed to the role of Vice Chancellor in 2007 and, in 2011, saw the university rise two spots in the League Table over the previous year.  However, does this justify a £18,000 salary rise to £210,000?  For the following year, West London dropped 16 places – the joint-highest fall on the table that year.  It may be wise to look at what is going when the annual reports are issued again.

  • York St John University – Professor David Fleming has presided over one of the sharpest four-year drops we have seen in the UK rankings – a total of 24 places over a three-year period.  However, he saw his salary rise to £183,000 for the period to the end of 2011, an increase of £12,000 (7%)

Ultimately the biggest measure of success for universities is in the results table.  Rankings could be perceived as a crude way of measuring success… then again, what else do we have to on to see if a university is fulfilling its main objective?

Therefore, is it justified that Vice Chancellors should be seeing pay increases when the relative standard of their education is going down?  Success should be rewarded, I have no issue with that.  However, it appears that some universities are perceived to be rewarding failure.

It’ll become even clearer once universities publish the latest annual figures and financial data.  I will be sure to follow this up.

(Sources: University Annual Reports, University websites and promotional material, Company corporate information and annual accounts.)

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1 Response to Vice-Chancellors: are their salaries and perks justified?

  1. Pingback: £3m spent on wine at Cambridge Uni. Cheers! | Tutorhub Blog

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