Pay Comparisons: An Analysis of UK University Vice Chancellors Pay Awards

Posted: 9 Jan 2008

See all articles by Kai-Hong Tee

Kai-Hong Tee

Loughborough University - School of Business and Economics

Robert Watson

Instituto de Empresa

Heather Tarbert

Glasgow Caledonian University - Division of Accounting & Finance

Date Written: April 1, 2007

Abstract

This paper examines UK University Vice Chancellors (VC) pay awards. The empirical analysis, covering the period 1997 to 2002, evaluates the impact upon VC pay awards of university performance measures, an internal pay comparison measure and two external pay comparisons, i.e., the pay of other VCs and the pay of CEOs leading comparable-sized UK firms. We find no evidence that VC pay awards are related to any of the performance measures, though the positive relationship found between changes in the proportion of other highly-paid employees and VC pay awards suggests that internal pay comparisons play an important role in remuneration committee decision making. Of the two external pay benchmarks, the pay received by other VCs has the largest positive impact upon VC pay awards. Nevertheless, the (much smaller) partial adjustment of VC pay explained by the difference between the two external pay benchmarks was also statistically significant. Thus, whilst average VC pay increased by some 40% over the period, this was significantly less than the increase in the pay of comparable UK CEOs. We suggest that this conservatism by university remuneration committees stems largely from political rather than financial constraints.

Keywords: CEO Pay, University Vice Chancellor's Pay, Pay Comparisons

JEL Classification: J33, L31

Suggested Citation

Tee, Kai-Hong and Watson, Robert and Tarbert, Heather, Pay Comparisons: An Analysis of UK University Vice Chancellors Pay Awards (April 1, 2007). Available at SSRN: https://ssrn.com/abstract=1081910

Kai-Hong Tee

Loughborough University - School of Business and Economics ( email )

Epinal Way
Leics LE11 3TU
Leicestershire
United Kingdom

Robert Watson

Instituto de Empresa ( email )

Serrano 99
Madrid, 28006
Spain

Heather Tarbert (Contact Author)

Glasgow Caledonian University - Division of Accounting & Finance ( email )

Scotland
United Kingdom
0141 331 3796 (Phone)

HOME PAGE: http://www.gcal.ac.uk/cbs/about/aaf/staff/tarbert.html

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
1,519
PlumX Metrics