Pay Comparisons

An Analysis of UK University Vice Chancellors Pay Awards

H. Tarbert, Kai-Hong Tee, R. Watson

    Research output: Working paper

    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.
    Original languageEnglish
    PublisherUniversity of Aberdeen Business School
    Number of pages38
    Publication statusPublished - Apr 2007

    Publication series

    NameUniversity of Aberdeen Business School Working Paper Series
    No.20
    Volume2007
    ISSN (Print)0143-4543

    Fingerprint

    Remuneration
    Benchmark
    Performance measures
    Chief executive officer
    Proportion
    Financial constraints
    Partial adjustment
    Decision making
    Empirical analysis
    Conservatism
    Employees

    Cite this

    Tarbert, H., Tee, K-H., & Watson, R. (2007). Pay Comparisons: An Analysis of UK University Vice Chancellors Pay Awards. (University of Aberdeen Business School Working Paper Series; Vol. 2007, No. 20). University of Aberdeen Business School.

    Pay Comparisons : An Analysis of UK University Vice Chancellors Pay Awards. / Tarbert, H.; Tee, Kai-Hong; Watson, R.

    University of Aberdeen Business School, 2007. (University of Aberdeen Business School Working Paper Series; Vol. 2007, No. 20).

    Research output: Working paper

    Tarbert, H, Tee, K-H & Watson, R 2007 'Pay Comparisons: An Analysis of UK University Vice Chancellors Pay Awards' University of Aberdeen Business School Working Paper Series, no. 20, vol. 2007, University of Aberdeen Business School.
    Tarbert H, Tee K-H, Watson R. Pay Comparisons: An Analysis of UK University Vice Chancellors Pay Awards. University of Aberdeen Business School. 2007 Apr. (University of Aberdeen Business School Working Paper Series; 20).
    Tarbert, H. ; Tee, Kai-Hong ; Watson, R. / Pay Comparisons : An Analysis of UK University Vice Chancellors Pay Awards. University of Aberdeen Business School, 2007. (University of Aberdeen Business School Working Paper Series; 20).
    @techreport{ef384887fbbc4964b4d5f3295d4a099a,
    title = "Pay Comparisons: An Analysis of UK University Vice Chancellors Pay Awards",
    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.",
    author = "H. Tarbert and Kai-Hong Tee and R. Watson",
    year = "2007",
    month = "4",
    language = "English",
    series = "University of Aberdeen Business School Working Paper Series",
    publisher = "University of Aberdeen Business School",
    number = "20",
    type = "WorkingPaper",
    institution = "University of Aberdeen Business School",

    }

    TY - UNPB

    T1 - Pay Comparisons

    T2 - An Analysis of UK University Vice Chancellors Pay Awards

    AU - Tarbert, H.

    AU - Tee, Kai-Hong

    AU - Watson, R.

    PY - 2007/4

    Y1 - 2007/4

    N2 - 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.

    AB - 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.

    M3 - Working paper

    T3 - University of Aberdeen Business School Working Paper Series

    BT - Pay Comparisons

    PB - University of Aberdeen Business School

    ER -