Finally, we note significant differences in the structure of college presidents' employment contracts compared to those of football coaches. In Part I, we provide an overview of the implications of economic theory for the compensation and contract determinations of college presidents and football coaches.
ECONOMIC THEORY, INSTITUTIONAL FEATURES, AND COLLEGE PRESIDENTS'
Given that the definition of success is unclear, the president's ability to influence success is diffuse. As such, it is more common for the board to qualitatively assess the chairman's performance based on the overall opinion of the members.
COLLEGE PRESIDENTS: RECRUITING, HIRING, AND NEGOTIATION OF
In addition, the potential for the president to influence many of these measures in the short term is limited. They also, in most cases, have a fallback faculty position when they leave the presidency, since it is common for the president to return to the faculty after completing a term appointment." Accordingly, we would expect severance pay provision to be much less .generally in the case of college presidents.
Creating the Search Committee to Hire a New College President
A closely related issue is whether to employ an external search consultant, such as an executive search firm, to assist the Search Committee in compiling and screening a pool of potential candidates. A final preliminary issue is whether the Board will immediately appoint an interim president to give the search committee enough time to proceed appropriately.
Planning the Search and Creating a Pool of Candidates
Given the broad nature of the Search Committee's work, a reasonable time frame for the entire process to be completed is usually four to six months.7 8. At this point the Search Committee may begin a comprehensive search for candidates.8 2 In the early stages the committee will cast a wide net using a variety of techniques to generate a list of potential candidates.
Interviewing Candidates and Developing the Finalists
These visits usually last one-and-a-half to two days.0 1 At this stage, the Search Committee Chair will have to discuss with each finalist candidate the general conditions of employment that the university will offer. At the end of their visits, the Search Committee Chair generally asks each candidate if he or she is still interested in being selected for the position to make sure they are still looking for the position.1 0 2.
Picking the President
Each finalist must visit the university campus to meet with the various university stakeholders, including faculty, students, administrators and union representatives. This usually includes the total compensation contemplated in addition to any special terms unique to the candidate. These discussions ensure that the candidate is aware of and accepts the financial terms of the position before an offer is extended.
Negotiating the New President's Contract
However, these rules are designed to address the Board's policies and procedures for determining compensation, not compensation levels themselves. Because of these rules, and as a matter of good practice, contractual provisions providing for periodic performance evaluations should be included in the president's employment contract.124 These typically "include annual evaluations and comprehensive reviews every four or five years." 2 5 In 2011, 87 percent of faculty presidents had "contracts requiring annual performance evaluations conducted by boards of trustees or board subcommittees (60 percent), heads of systems (20 percent), or board chairs (14 percent)." Similarly, data on the frequency of comprehensive multi-year performance reviews are not available.126 We were unable to obtain much information on these reviews for our study.34; interim sanctions regulations strongly suggest a focus on peer institutions, those that would generally be treated with scrutiny. comparable in terms of control (public or independent, for-profit or not), enrollment, endowment, and other such variables.”12 7 Larger schools often hire compensation consultants to help the board make appropriate comparisons.
Benchmarking compensation levels explains some of this increase, as college presidents can compare their pay packages to their counterparts at other institutions.13 0 In the words of one commentator: “It's not unlike coaches who have a winning season ... They keep close tabs on each other, and wages keep rising."131.
Selecting Football Coaches
At the end of the initial interviews, the school will conduct background checks to make its final decisions about who to invite back. Often the interview will take place in an out-of-the-way location to keep the process as far from the public eye as possible."). After the coach accepts the position, his agent will of the remaining terms of the employment contract with the agent's counterpart at the university or outside counsel for the university.
Terms to be finalized may include the definition of "cause" in the contract's termination provisions, or the type(s) of incentive pay that the coach will be eligible to receive under certain circumstances.
Comparing College President and Football Coach Hiring Processes
COLLEGE PRESIDENT VS. FOOTBALL COACH CONTRACTS
Data Collection and Comparison of the Samples
Finally, we note that there are a small number of college presidents who did not have written employment contracts. As we discuss below, the football coaches in our sample all also have written employment contracts, although CEOs of public corporations often do not. relatively smaller amounts of firm-specific investments in their schools than CEOs in the firms they work for. Given the relatively rapid turnover of football coaches compared to college presidents, we expected coaches to enter into a greater number of initial contracts.
Similarly, we expected fewer amended and restated employment contracts for football coaches because they often do not remain employed at the same school as long as college presidents and are therefore less likely to need to enter into an amended and restated contract.
Comparing College President and Football Coach Compensation
- Year-By-Year Comparisons
- Compensation Comparisons by Size
- Differences Between College Presidents and Coaches by School
- Perquisite Comparisons
Having examined the large differences in compensation by school and program size, we turn to a comparison of the differences in compensation between college presidents and football coaches at the same schools. For each group, we compared the differences between the salaries of football coaches and college presidents and the total compensation. Second, an interconference comparison of salary data shows that college presidents and football coaches are paid more at Power Five Conference schools, even though the differences in coach salaries are much larger.
Across the Power Five conferences, football coaches earn an average of 6.59 times as much as college presidents overall, and the average differences are nearly as large. The same comparison for university presidents shows that the pay differences between the two groups are quite small. Overall, it is the football coaches in the Power Five conferences whose compensation is so very different from that of all college presidents and that of the football coaches in other conferences.
Contract Length Comparisons
Our data show that college presidents have much longer average tenure (7.6 years) and median tenure (6.0 years). Most college presidents are focused primarily on fundraising and administrative duties, often not even teaching a class. A third possible explanation for differences in contract length is the close relationship between most college presidents and university administrators who are ultimately charged with managing the school.
Not surprisingly, this leads to a comfortable, friendly relationship between the board of trustees and university presidents; a situation where there is no constant threat of termination.
Termination Provisions: With Cause and Without Cause
For-Cause Termination Clauses
Fraud was coded if the contract stated fraud or dishonesty as a reason for termination for cause. Substance abuse was coded if the contract stated substance abuse of any kind as a reason for termination for cause. Conflict of interest was coded if the contract stated a conflict of interest as a reason for termination for cause.
Substance abuse was coded if the contract listed any substance abuse as a reason for termination.
Evolution of Cause Termination Provisions
However, even in the most recent period of time the college president's contracts do not contain provisions for termination for cause. We were interested in seeing whether the change in the number of cause termination definitions over time is statistically significant. This is strong evidence that the number of conditions set forth in termination for cause provisions in all college football coaching contracts has increased over time.
Why there are more terms in the definitions of completion because of these coaches and college presidents over time.
Without-Cause Termination Payments
In addition, we note that only a small fraction of college president employment contracts contain provisions requiring presidents to mitigate damages paid by the school if they are terminated without cause.232 By comparison, approximately one-third of college head coaches' contracts football teams in our sample require a coach to leave to mitigate their losses.23 3 Sometimes, the same school will treat these employees differently. For those contracts that contain provisions for termination without cause, Table 11 illustrates the distribution of payments provided for in these employment agreements. Section V, paragraph 4 states: "In the event the President is terminated without cause and does not return to his faculty position, the President agrees to mitigate the University's obligation to continue the payments set forth in this section by making reasonable and diligent efforts. to get a new job". Employment Agreement between the Administrators of Ind.
A short-term job means that coaches have a greater need for compensation for the increased risk of financial damage that can result from dismissal without cause.
Noncompetition and Arbitration Provisions
Football coaches are more likely to have arbitration provisions: we found such provisions in 11.4% of football coaching contracts." First, football coaches have much shorter tenures than college presidents, which has implications important to the structure of their contracts.Finally, turning to the legal terms of employment contracts, we find that the contracts of football coaches have much more specific terms than those of college presidents.
In particular, we have shown that football coaching contracts are more likely to include a fixed term of employment, carefully worded termination-for-cause provisions, and significant amounts of severance pay when terminated without cause.
