Are Australia’s universities getting value for money when it comes to Vice Chancellors? Correction 15 August 2013 In earlier versions of this paper, the remuneration package of the Vice Chancellor of the University of Newcastle in 2012 was incorrectedly reported as being $1,035,000. This is incorrect and the correct value was $598,000. The payment of over $1m in remuneration (from p44 of Vol 2 of Univiesity of Newcastle Annual Report 2012) was made to an anonymous person, who clearly was not the VC. We aplogise to Prof McMillen for misrepersenting the position. The following tables and charts have been amended to correct this error. An analysis of the 2012 Annual reports of Australia’s 37 public universities shows that their Vice Chancellors (VCs) were well financially rewarded for their efforts. In total the VCs received remuneration packages worth close to $30m. The data in Figure 1 and Table 1 shows that total remuneration ranged from $1.2m for the VC of Macquarie University (who for the bulk of 2012 was Prof Steven Schwartz) to a little over $300,000 for Prof Andrew Vann at Charles Sturt University (CSU). The data also clearly indicates that Prof Vann’s remuneration package is very much an outlier with the next lowest package being almost being in excess of 50% higher than his package at $466,000 (USQ). As a matter of interest the Prime Minister’s salary is about $500,000, which means there are only two Australian VCs whose remuneration packet is less than the PM’s salary. In addition to showing the VC remuneration packages in descending order for 2012, Table 1 also provides other information in relation to each university, including the salaries (and rankings thereof in descending order) as at 31 December 2012 for a Senior Lecturer Step 1 and HEW Level 6 Step 1. The data shows that there is very little or no relationship between the remuneration paid to VCs and the salaries paid to their staff. The two most outstanding examples of stark difference in relative rankings are the University of South Australia and the University Queensland. In both these cases the VCs salaries are in the top ten but staff salaries languish in the mid twenties or below. Australian Catholic, James Cook and Griffith also come in for special mention when it comes to VCs be much higher on VC remuneration league table than their staff. On the other hand, were Charles Sturt, Curtin, Victoria University, Tasmania and Central Queensland where the rank of their VCs remuneration was much lower than the rank of their staff salaries. In order to try to understand what determines a Vice Chancellor’s worth (at least in financial terms) the NTEU compared the size of VCs remuneration packages to a number of other variables for each institution. The correlation coefficient, which shows the strength of the liner relationship between two variables (where +1 shows a perfect positive relationship and -1 a perfectly negative relationship) and the associated r-squared (used to measure goodness of fit or the statistical significance of relationship) for the variables tested are also shown in Table 1. While none of the variables showed a statistically significant relationship with VCs remuneration, several had a moderate positive relationship. These were the variables associated with the size of the institution (that is, full time equivalent (FTE) staff and students) as well as a crude measure of research quality, namely the proportion of assessed discipline clusters that received a 4 or 5 rating in the 2012 ERA. Interestingly, the relationship between financial performance (average operating margin over the period 2006-2011) and VC remuneration is negative. The weak nature of the relationship precludes one, no matter how tempting, to conclude that an effective way of improving a university’s financial performance is to cut its VC’s remuneration. The relationship between VC remuneration and FTE staff and VC remuneration and ERA ratings are shown in Figures 2 and 3 respectively. The data in these Figures confirm that the remuneration package paid by CSU is very much an outlier. In addition, the data also indicate that the Australian Catholic University (ACU), and Macquarie University (MAC) are also outliers in the sense that their VCs would appear to be being paid over the odds when compared to other VCs at institutions of similar size and relative performance on the 2012 ERA. Of course this is not to say that the package paid to each of these VCs does not reflect their personal qualities and reputations as exceptional managers and leaders of people. No doubt each of these universities would make the very valid point that if you want to attract the best talent you have to offer attractive competitive pay and conditions. Finally, what is the answer to the question, are universities getting value money from their VCs? Based on the analysis undertaken by the NTEU the answer is that it’s all relative. And, that relatively speaking, some universities are probably getting better value for money than others. Figure 1 Table 1 Vice Chancellor Remuneration and Other Selected Variables 2012 Average Proportion of VC's Total Operating Salary Salary 31/12/2012 Total Share of Total Operating Disciplines Total Revenue Result 31/12/2012 for Sen Lect for Hew 6 University Vice Chancellor VC Rank Staff Staff FTE Student Margin with ERA Rumuneartion 2011 2011 Senior Lecturer Rank HEW Rank FTE Casuals % FTE 2006-2011 Excellent 2012 $m $m Level C:1 Level 6:1 % I ncom e (4&5) Ratings Prof Stephen Schwartz Macquarie University (retired in September $1,185,000 1 2,768 21.6% 28,538 664.45 65.16 6.6% 35% $104,146 7 $67,817 5 2102) Prof Bruce Dowton $263,000 The University of Queensland Prof Peter Hoj $1,180,000 2 7,704 12.4% 37,022 1,640.52 203.69 6.2% 80% $97,830 25 $64,316 27 Monash University Prof Edward Byrne $1,105,000 3 8,071 15.6% 49,626 1,501.97 83.33 3.3% 68% $100,705 14 $66,867 13 Australian Catholic University Prof Greg Craven $1,035,000 4 1,724 21.1% 17,887 255.40 11.09 7.4% 0% $103,271 8 $64,695 23 The University of Melbourne Prof Glynn Davis $1,005,000 5 7,937 14.7% 38,243 1,687.83 82.15 1.6% 85.45% $104,370 6 $68,930 3 University of South Australia Prof David Lloyd $945,000 6 3,081 16.5% 23,624 550.13 73.19 7.2% 22.67% $96,953 32 $63,319 35 The University of Western Prof Paul Johnson $945,000 6 4,025 7.6% 20,387 825.93 50.01 1.8% 47.62% $104,699 4 $68,512 4 Australia Queensland University of Prof Peter Coaldrake $937,000 8 4,247 17.5% 32,627 786.78 63.62 5.3% 26.32% $100,067 18 $66,092 14 Technology The University of Sydney Dr Michael Spence $925,000 9 7,519 16.9% 40,916 1,597.14 92.60 4.5% 84.54% $108,318 1 $71,163 1 Prof James McWha (resigned at end of June The University of Adelaide $918,000 10 3,684 14.4% 20,086 749.45 66.03 6.9% 46.36% $102,429 9 $66,901 12 therfore package only covers six months) Prof Warren Bebbington The University of Adelaide ????? (appointed in July) RMIT University Prof Margaret Gardner $915,000 11 3,484 20.1% 41,458 793.95 56.04 8.0% 20% $98,077 24 $65,194 20 The University of New South Prof Fed Hilmer $915,000 11 6,704 15.7% 37,245 1,469.75 168.35 1.9% 75.24% $105,216 3 $70,323 2 Wales University of Western Sydney Prof Janice Reid $865,000 13 2,928 21.0% 30,179 524.70 14.93 5.5% 16% $104,645 5 $67,729 7 University of Wollongong Prof Paul Wellings $855,000 14 2,476 18.4% 22,038 493.79 38.17 5.2% 32.22% $101,524 12 $64,843 22 University of Technology, Prof Ross Milbourne $845,000 15 3,068 20.9% 25,777 587.30 26.97 6.7% 25.56% $105,976 2 $67,752 6 Sydney The Australian National Prof Ian Young $830,000 16 4,413 10.9% 14,368 1,002.81 84.68 7.0% 80% $101,224 13 $67,177 11 University James Cook University Prof Sandra Harding $777,000 17 1,962 11.2% 15,230 391.18 42.52 10.2% 17.89% $97,074 31 $64,276 29 Griffith University Prof Ian O'Connor $772,000 18 4,378 18.9% 31,221 755.23 90.03 11.2% 20% $97,237 29 $64,215 30 The Flinders University of Prof Michael Barber $765,000 19 2,249 14.9% 14,619 376.31 35.16 9.7% 3.81% $96,594 35 $63,957 33 South Australia University of Canberra Prof Stephen Parker $765,000 19 1,067 18.7% 11,187 192.44 9.18 -2.4% 0% $102,027 10 $67,269 10 Deakin University Prof Jan van Hollander $745,000 21 3,639 20.9% 30,579 681.23 75.62 12.0% 18.95% $97,352 26 $64,642 24 Edith Cowan University Prof Kerry Cox $725,000 22 1,824 14.2% 17,652 353.43 32.94 6.1% 0% $100,502 15 $65,801 16 La Trobe University Prof John Dewar $725,000 22 3,251 20.0% 26,158 611.12 83.79 2.9% 15.56% $97,307 27 $64,403 26 Swinburne University of Prof Linda Kristjanson $725,000 22 1,606 18.7% 19,213 478.45 46.83 10.0% 21.67% $96,943 33 $64,605 25 Technology Murdoch University Prof Richard Higgott $695,000 25 1,564 16.3% 15,739 310.84 39.94 8.9% 14.44% $100,502 15 $65,801 16 University of Ballarat Prof David Battersby $635,000 26 827 19.2% 9,219 238.47 42.81 11.6% 0% $97,243 28 $64,290 28 Charles Darwin University Prof Barney Glover $608,000 27 614 18.1% 5,135 222.22 12.03 3.9% 14.55% $98,092 23 $63,194 37 Southern Cross University Prof Peter Lee $608,000 27 1,135 22.2% 9,487 194.50 9.64 4.9% 31.11% $98,673 20 $67,466 8 The University of New England Prof James Barber $605,000 29 1,230 8.5% 11,181 232.53 15.29 2.2% 4.71% $98,401 21 $65,056 21 The University of Newcastle Prof Caroline McMillen $598,000 30 3,073 15.5% 24,515 579.67 32.50 4.3% 25.56% $99,096 19 $65,230 19 University of the Sunshine Prof Greg Hill $577,000 31 802 20.9% 6,564 126.44 8.36 10.7% 8.89% $96,074 36 $63,449 34 Coast Central Queensland University Prof Scott Bowman $560,000 32 1,145 8.3% 11,726 259.88