Paterno: Why It’s Time for College Governing Boards to Rethink Presidential Contracts

In the news this week came another story highlighting some of the very real challenges facing higher education in the United States. The president of Michigan State University left the school for Clemson. On his way out he mentioned that tensions with the trustees were part of what drove him to leave the school after just two years in East Lansing.

And he left even after Michigan State trustees held a meeting to double his salary and voted (5-3) to change the bylaws to restrict free speech criticism by board members. That salary increase came even as the school has ordered 9% budget cuts for the next two years. This follows the establishment of a faculty union in the past few months.

For now, let’s set aside personalities and schools because these threads are interwoven as part of a larger problem facing colleges and universities nationally. 

It all comes back to a current power imbalance between presidents and governing boards that favors the presidents in a big way. Boards dread few things more than searching for a new president, and that leaves them often unwilling to risk a departure. And it has caused some boards to forget who is supposed to be running the show.

With presidents and chancellors jumping from job to job at a rate that is both unprecedented and problematic, it is a sellers’ market for them. Given the rate of turnover, it presents the need for more board vigilance because ultimately, while presidents can move on quickly, the boards must protect the long-term interests stretching generations into the future. 

Just how bad is the transient nature of university presidents?

The Big Ten is made up of 18 of the nation’s leading research universities. Eight Big Ten schools rank among the top 25 research universities in the country. By comparison, the Ivy League and the ACC have five each and the SEC has three. In research (and football) the Big Ten can confidently say “It just means more.”

So clearly the Big Ten is not a place where presidents or chancellors come to cut their teeth before moving along. These are premier jobs.

The average length of service by a sitting Big Ten president or chancellor is currently right around 1.5 years, with the presidents of Maryland (6 years), Iowa (5 years), Penn State (4 years) and Oregon (3 years) having the longest tenures at their respective schools.

What is driving so much turnover both within the Big Ten and nationally? There are numerous factors.

Some of it has been political pressures that have ramped up since January 2025. Politicians are placing more scrutiny on policies and curriculum and are threatening research expenditures to coerce compliance. 

Some university leaders are bothered by any and all criticism from governing boards or even the public. These are not jobs for people with rabbit ears and thin skin.

As some presidents demand big salary increases, and many create resentment from faculty and staff, leading to “us vs. them” mentalities or votes of no confidence. With so much turnover and movement, distrust is a function of not having nearly enough time to even get to know a president and new staff.

And still another, and easily fixable, factor has been the one-sided nature of contracts between presidents/chancellors and the university. 

If there is one thing that university governing boards want to avoid at all costs, it is the dreaded presidential search. Not only are you rolling the dice and picking one person, but you’re also walking into months of transition and staffing changes from provosts to executive staff to deans.

Presidents aren’t dumb. They know boards fear change.

As a result, presidents have an advantage and the heretofore reactionary nature of governing boards means they are far more willing to extend and renew contracts with large increases in pay. This is not said as a judgment; it is a free-market labor system that currently favors university presidents. 

It is not unlike what we’ve had with college football coaches. To be clear, presidents are not getting THAT kind of money,  but they are moving around—a lot. While Big Ten presidents have been in their jobs around 1.5 years on average, Big Ten football coaches average 4.5 years. And even if you take out Iowa coach Kirk Ferentz (26 seasons) as an outlier, the average of the other 17 coaches is still 3.5 years.

It may be time for governing boards to rethink presidential contracts. Presidents are getting use of private jets, deferred compensation, complex insurance and financial arrangements for tax purposes and other perks. Let’s be clear on this: These are complex jobs, they are difficult jobs and they are under more outside public and political scrutiny than they’ve been in a long time. Compensation is bound to rise.

But there is a way to fix the contractual power imbalance that favors presidents. It is one that presidential compensation consultants do not want to see happen. Most boards hire consultants to walk them through contract negotiations. 

In major college football coaching contracts, universities have a buyout clause should they decide to fire the coach. But there is also a buyout clause should the coach want to jump to another job. The idea is to create a buyout for a coach to leave that is either prohibitive financially or at least helps cover the transition and search costs.

Applying that same type of buyout structure to president’s contracts could help governing boards get some more control over a market that is almost as wildly out of control as the college football and basketball player transfer portal.

In this case, a $5 million-to-$6 million buyout on a president’s contract would be enough to keep most in place. And even if they did leave, it would help cover the costs for a new search and transition. There could be some allowances made for a president leaving for a private sector job, or if they get appointed to a position outside of academia.

But consultants love the chaos. More movement and more renegotiations mean more consulting work. I’m not finding fault. They are trying to make money, and they benefit from the current order.

Some have argued; “that type of contract hasn’t been done for presidents.” Others would suggest that a buyout cause might scare away potential candidates. The current times call for something to change.

When you’re going through that search and hiring dance, the buyout clause can become a litmus test. Every presidential candidate will tell a search committee about what a “dream job” the school is for them. 

These clauses are just a show of faith, a visible sign of putting their money where their mouth is. And these clauses re-establish the correct board/president balance as it relates to the long-term interests of major universities.

As Michigan State and a slew of other universities around the country are finding out as they embark on yet another presidential search; “dream job” talk is cheap. The alternative is expensive financially, organizationally and can damage the long-term interests of a great university.