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The Stairway to the Top: The Remuneration of Academic Executives


  • Kenneth W Clements

    (UWA Business School, The University of Western Australia)

  • Izan H Y Izan

    (UWA Business School, The University of Western Australia)


Australian universities have in recent times been undergoing a substantial transformation in the way in which they are managed. They have moved away from the (British-based) traditional collegiate model to one in which professional managers play a centre-stage role. This paper investigates an important element of the managerialism at Australian universities, the market for what we call “academic executives” (AEs). We analyse the remuneration of the top AEs at Australian universities over the past six years and show that institutional size is a dominant driving factor of remuneration, as has been found with compensation of CEOs in the private sector. We also find the pay-size elasticity to be about 0.25 and is the same for both the university and private sectors; and remarkably, this value has also been found in previous studies on executive remuneration for the US and the UK. The remuneration schedule for the university sector is about half as steep as that for the private sector, suggesting that it is a much harder climb to the top of the corporate ladder. We analyse the structure of remuneration among AEs and the Group of Eight universities are found to have a pay parity structure that is closest to that for the private sector.

Suggested Citation

  • Kenneth W Clements & Izan H Y Izan, 2007. "The Stairway to the Top: The Remuneration of Academic Executives," Economics Discussion / Working Papers 07-14, The University of Western Australia, Department of Economics.
  • Handle: RePEc:uwa:wpaper:07-14

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    References listed on IDEAS

    1. Lazear, Edward P & Rosen, Sherwin, 1981. "Rank-Order Tournaments as Optimum Labor Contracts," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 841-864, October.
    2. Sherwin Rosen, 1990. "Contracts and the Market for Executives," NBER Working Papers 3542, National Bureau of Economic Research, Inc.
    3. Baker, George P & Jensen, Michael C & Murphy, Kevin J, 1988. " Compensation and Incentives: Practice vs. Theory," Journal of Finance, American Finance Association, vol. 43(3), pages 593-616, July.
    4. Coupé, Tom & Smeets, Valerie & Warzynski, Frederic, 2003. "Incentives in Economic Departments: Testing Tournaments?," Working Papers 03-25, University of Aarhus, Aarhus School of Business, Department of Economics.
    5. Peter F. Kostiuk, 1990. "Firm Size and Executive Compensation," Journal of Human Resources, University of Wisconsin Press, vol. 25(1), pages 90-105.
    6. Eriksson, Tor, 1999. "Executive Compensation and Tournament Theory: Empirical Tests on Danish Data," Journal of Labor Economics, University of Chicago Press, vol. 17(2), pages 262-280, April.
    7. Ehrenberg, Ronald G & Bognanno, Michael L, 1990. "Do Tournaments Have Incentive Effects?," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1307-1324, December.
    8. Murphy, Kevin J., 1999. "Executive compensation," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 38, pages 2485-2563 Elsevier.
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