Executive overdrive

Do vice-chancellors have too many plates in the air? Times Higher Education's annual survey of pay in the academy looks at the additional roles the sector's leaders take on. In an era of pay restraint, handsomely rewarded bosses do much of this work for free, but Jack Grove asks whether external posts are dangerous distractions or a vital part of the university mission

May 10, 2012

As the cap on tuition fees trebles this autumn, students will rightly expect their university leaders to be focused on providing them with a high-quality academic experience.

In this light, this year's annual Times Higher Education survey of pay in the sector (see related files, right) includes an investigation of vice-chancellors' external commitments and earnings. From lucrative corporate directorships to positions with charities, these roles touch almost every aspect of British society.

But do such sidelines distract university leaders from their principal concern: running institutions with multi-million-pound turnovers? Or is it essential for them to engage in this way with other sections of society?

As the academy struggled with significant budget constraints in 2010-11 - the time of the Browne review and the approval of £9,000 fees at many institutions - its leaders continued to take home sizeable pay packets.

Universities spent an average of £208,037 on vice-chancellors' basic salaries, excluding pension contributions, according to an analysis of university financial statements by the accountancy firm Grant Thornton for THE.

The total value of remuneration packages rose by 1.1 per cent, while spending on salaries alone increased from £31.9 million to £33.3 million. Pension payments averaged £31,083.

The pay packages of just under half of all university heads grew by more than 0.5 per cent - the sector-wide pay increase that year. But about a quarter had their packages cut and about a tenth had theirs frozen at 2009-10 levels.

So which vice-chancellors received a rise? Sir Steve Smith, who was president of Universities UK in the period, enjoyed an 8.9 per cent increase from the University of Exeter, taking his salary to £318,000. That was principally down to a performance-related bonus of £53,000, up from £,000 in 2009-10, which followed hot on the heels of his knighthood (announced in June last year).

Keith Burnett received a £16,000 salary increase from the University of Sheffield, which boosted his emoluments, including pensions, to £311,000.

And David Eastwood was awarded a salary increase of almost 8 per cent from the University of Birmingham, taking his basic pay to £368,000 (£419,000 once pensions are included), making him the second-highest paid leader in the sector.

But top of the pay tables was Andrew Hamilton, who pocketed a salary of £371,000 as vice-chancellor of the University of Oxford. The £53,000 he received in pension contributions gave him a package worth £424,000 and pushed him ahead of Eastwood.

But our analysis of vice-chancellors' external earnings reveals that Hamilton was not the most richly rewarded individual working in higher education. That title fell to Sir Andrew Likierman, dean of the London Business School, whose overall earnings for 2010-11 totalled more than £500,000 thanks to substantial income from other roles.

In addition to his £330,000 salary as dean, he received £1,000 as a non-executive director of Barclays Bank and between £50,000 and £55,000 as non-executive chairman of the National Audit Office, adding up to £507,000-£512,000, excluding pension contributions.

THE used the Freedom of Information Act to request details of the positions vice-chancellors held on the boards of external bodies in 2010-11, as well as their remuneration from such roles, and also examined companies' financial statements to ascertain salary information.

Dame Nancy Rothwell was awarded £96,000 as non-executive director of multinational drug giant AstraZeneca in 2010-11, according to the company's annual accounts, in addition to her £248,000 pay package as leader of the University of Manchester.

A university spokesman says that Rothwell held the directorship when she took office and that Manchester's "board of governors believes it enhances her ability" to carry out her duties as president and vice-chancellor.

Peter Gregson, a research engineer, continued to earn £55,000 as a non- executive director of Rolls-Royce while running Queen's University Belfast.

Overall, 51 leaders had paid roles besides their day jobs. Seven institutions refused to disclose whether their heads were paid for their external roles or not. These said either that they did not hold such information or that they were under no obligation to release it.

Before quitting as director of the London School of Economics over the controversy surrounding the institution's links with Libya, Howard Davies was a director of investment bank Morgan Stanley and an adviser to multinational finance firm Promontory. The LSE declined to declare his earnings for either role (although Bloomberg Businessweek calculates that the former Financial Services Authority chairman was paid about £200,000 a year by Morgan Stanley). It also declined to disclose his remuneration as a non-executive director of Paternoster, a pensions company bought by Goldman Sachs for £260 million in January 2011.

Davies says that the LSE's chairman and council agreed that he could take on two non-executive roles when he became director in 2003. His advisory role at Promontory amounted to "three or four telephone calls a year". He adds that his board fee at Morgan Stanley was £60,000, with the rest of the remuneration taking the form of entitlements to shares that could be redeemed only in the long term.

Sally Hunt, general secretary of the University and College Union, argues that it is "not right or fair" that vice-chancellors enjoy "commissions that allow them to top up an already large pay packet while they drive down staff pay".

"Those vice-chancellors who get involved in work that benefits the community deserve credit, along with those staff who use fees to benefit the university," she says. "But many would question the right to additional personal income for work seen as part of their day-to-day schedule."

Most institution heads, however, did not receive large sums in return for their additional duties.

Several vice-chancellors received £5,000 a year for sitting on the board of the Higher Education Funding Council for England, for example, while others picked up similar amounts advising the research councils.

A number held posts at regional development agencies (all of which were abolished by the coalition government in March this year). Gerry McCormac, vice-chancellor of the University of Stirling, took home £11,635 as a board member of Invest Northern Ireland (he was appointed before taking office at Stirling in May 2010); meanwhile, Exeter's Smith was paid £8,666 for his work with the South West Regional Development Agency.

Elsewhere, in her final full year at the University of Greenwich, Baroness Blackstone was chair of the British Library and the Great Ormond Street Hospital Trust, which entitled her to payments of up to £25,000 for each role on top of her £224,652 salary.

The external earnings of UK vice-chancellors remain a long way off the corporate sums raked in by their US counterparts.

The US press recently reported that Shirley Ann Jackson, president of Rensselaer Polytechnic Institute, a private university near New York, earned $1.4 million (about £860,000) in 2010 on top of her institutional income for sitting on various corporate boards.

Among the 50 wealthiest US institutions, those heads who held at least one external executive post had a median income from corporate positions that year of $239,998.

Where UK vice-chancellors did earn extra income from outside roles, more often than not they handed the money to their university or arranged for it to be paid to the institution.

Of the 51 with paid roles, 30 directed the cash to their institutions. For instance, Chris Higgins, vice-chancellor of Durham University, parted with the £6,000 paid to him by the Centre of Excellence for Life Sciences, a biotech firm based in the North-East, while £5,800 paid to him by the One North East Regional Development Agency also went to Durham.

John Brooks, vice-chancellor of Manchester Metropolitan University, was paid £5,241 by the Northwest Regional Development Agency in addition to his £246,000 salary, but returned the external payments to his primary employer.

Others went further. David Green was paid £2,850 as a board member of the Training and Development Agency for Schools on top of his £225,000 salary at the University of Worcester, but made a £10,000 charitable donation to Worcester in the same period.

Despite his critics at University College London, where the students' union forced a no-confidence motion last year, provost Malcolm Grant was a shining light in this respect. Grant, a barrister and academic specialist in environmental law, turned over to UCL payments worth £19,000 that he had received from Hefce, the Economic and Social Research Council and the Hong Kong University Grants Committee.

His latest additional role is overseeing the shake-up of UK healthcare as chair of the NHS Commissioning Board. Grant gives the £63,000 salary he earns from this role to UCL.

But money is only one issue: the time vice-chancellors spend on external roles is another.

For this reason, some have questioned Grant's NHS position, asking if it is possible or right to run a university with a multi-million-pound budget while holding down such a demanding second job two days a week.

Does taking on time-consuming extra roles, unpaid or otherwise, eat into vice-chancellors' time, energy and focus?

Paul Curran, vice-chancellor of City University London and a former Nasa scientist, teaches as a visiting professor at the University of Southampton among other additional roles. He believes that heads of institution should share their expertise with the wider world through fixed-term external posts.

"These roles are mutually beneficial, providing senior academics and their institutions with good experience from elsewhere while promoting and positioning their institution and the sector as major contributors to our economic and public life," he argues.

"Some roles are paid, many are not, of course, but all are approved by the institution in the context of existing commitments. Needless to say, the priority for all heads of institution is their students, along with their institution more broadly."

In his resignation statement last September (he will step down in July), Geoffrey Crossick admitted he had underestimated the workload when he took over at the University of London. That role, while only part-time, had prevented him from taking on other external posts in public life, he said.

So how should vice-chancellors balance extra roles with their main job? And are some taking on too much?

While it might be vital for them to share their expertise with the wider world (and several of them sit on THE's unpaid editorial board), eyebrows may be raised at the extent of some vice-chancellors' commitments.

According to the data returned to THE under FoI laws, 23 university leaders had eight or more additional roles - mostly unpaid - on top of their university duties.

Michael Arthur, vice-chancellor of the University of Leeds, had 14 unpaid roles. He also sat on the Medical Research Council's board (donating his £6,795 fee to Leeds) and two other advisory panels.

But the undisputed leader for extra unpaid graft was Eric Thomas (the current president of UUK), who took on a staggering 28 additional roles on top of his work running the University of Bristol. Thomas, vice-president of UUK in the period measured, was involved in varying degrees with 11 charities, sat on several policy committees and advisory boards, and fulfilled several roles for UUK.

Only 20 institution heads - mainly those running performing arts institutions - earned less than the £142,000 salary paid to the prime minister, a yardstick often used by the media and the Treasury to determine whether public servants are paid too much.

But with an average salary increase of 1.1 per cent in 2010-11, university heads argue that messages regarding the need for pay restraint have been heeded. Nicola Dandridge, chief executive of UUK, says that the sector's data for this academic year (2011-12) show that more than 60 per cent have received either a salary rise of under 0.1 per cent or a cut.

"The salaries of vice-chancellors reflect what it takes to recruit and retain individuals able to run complex multi-million-pound organisations operating in an increasingly competitive global market," she says. "These packages are in line with those in competitor countries and also with heads of public and private organisations of a similar size."

And the Committee of University Chairs says that governing bodies are "acutely aware of the need for continuing restraint in the current financial climate".

Meanwhile, data collected by the Higher Education Statistics Agency show that the average wage for full-time academics in the UK stood at £47,8 in 2010-11 - a 0.6 per cent increase. The London Business School was again top, paying its academics an average of £158,9. The Royal College of Music was second (£62,785) and the Royal College of Art third (£59,352).

Among universities, professors at the LSE were paid the most (£90,706 on average), followed by Oxford (£89,567) and Aston University (£89,284).

Key for table notes

Figures show cost of office for the year 1 August 2010 to 31 July 2011 and may include more than one post holder. Name of v-c/chief executive given is the last head in the post in that year.

* Includes benefits – no breakdown available.

1 V-c changed or left during the period measured, which may have an impact on figures.

2 V-c has left since the period measured.

3 Figures published last year were incorrect. Percentage increases based on actual figures.

4 Increases affected by accounting artefacts such as external employers and awards (eg, NHS).

5 Figures for 2009-10 unavailable.

6 The joint principals are not directly employed by the conservatoire. Figures are excluded from totals and averages.

7 Institution has merged since period measured. In the case of Trinity Saint David, a combination of pay packages has led to the size of the increases shown.

8 HEIs say the size of the percentage increase is a result of changes in post in 2009-10.

Source of figures: Grant Thornton

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