Colleges are paying presidents more than ever as boards compete to retain experienced leaders capable of navigating higher education’s headwinds. As faculty wages lag behind, however, how leadership communicates compensation can make or break campus morale.
“Boards need to be clear about the metrics and the process,” says Ross Mugler, CEO of the Association of Governing Boards of Colleges and Universities. “There are a lot of eyes on compensation, especially at public institutions.”
Base salaries for executives have increased by 6% over the last year, according to a recent workforce analysis by WTW, a nonprofit advisory service. Pay for faculty and staff has increased by about 4% in that time frame.
Lofty compensation packages reflect the increasingly complex demands of the college president. Modern leaders must pair academic expertise with sharp business instincts, guiding institutions through financial pressures, regulatory changes and mounting questions about higher education’s return on investment.
Many presidents also must oversee a high-revenue athletics division that now incorporates private interests and student-athlete compensation.
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Securing a qualified leader long-term can be difficult. Executive turnover increased by as much as 30% in 2025, according to WTW.
“What’s changed is not just the compensation practice—it’s the presidency itself,” says Mugler, a former Old Dominion University board member. “Boards are responding to the role that now carries even greater pressure around financial performance, enrollment and fundraising.”
Variable president pay: A win-win alternative?
Colleges and universities are enhancing variable pay packages to reward high-achieving presidents. Pay-for-performance structures and deferred compensation can incentivize leaders to complete short- and long-term objectives without committing the board to a base salary increase.
The typical annual bonus is anywhere between 15% and 40% of a president’s annual salary, far greater than the 10% to 15% five years ago, says Josephine Gartrell, higher education practice co-leader at WTW.
Nearly half of the public schools in the Association of American Universities now offer a median bonus at around 30%, according to Marsh, a risk advisory firm.
Senior leadership must be transparent with the campus community about why incentives are awarded and how performance is measured, Gartrell says.
“These are not holiday bonuses,” she adds. “These are incentive programs based around a specific set of metrics that drive the strategy of the particular organization.”
Revenue, enrollment and financial sustainability are among the most common benchmarks boards evaluate today, AGB’s Mugler says. Many boards have shifted their focus from graduation rates to revenue diversification and fundraising.
“If the institution is achieving their strategic goals, faculty and staff are not going to have a problem with a bonus,” he adds.
Penn State University’s board of trustees awarded President Neeli Bendapudi a $210,000 bonus in July, about 15% of her $1.4 million base salary, after determining she had met her annual performance goals, Centre Daily Times reports.
The bonus was coupled with compensation increases for employees across the institution. Under Bendapudi’s contract, her base salary will increase 3.5% annually, closely tracking the 3% raise approved for staff in Penn State’s 2027-28 budget. Faculty received a slightly larger 4% increase in stipends.
“In the Big Ten right now, retention of presidents is vital,” trustee Jay Paterno said at the board meeting. “I think it’s important that we understand the marketplace that we’re in and why these [bonuses] are meaningful and important to do.”
Institutions that reward their leaders despite weak performance risk alienating the campus community.
Faculty at Santa Barbara Community College recently criticized Superintendent-President Erika Endrijonas’ new contract that will raise her salary by 7% over three years, Santa Barbara News-Press reports. Employees have gone two years without a pay bump as the college grapples with enrollment declines and proposed layoffs.
Frustration intensified last week as professors protested the board of trustees’ package of minimal one-time payments for full-time staff, according to The Channels, the college’s student newspaper.
The dispute reflects broader concerns about employee compensation across higher education. Nationwide, full-time faculty’s real wages decreased last fall and have yet not returned to pre-pandemic levels, according to the AAUP’s latest survey on compensation.
